2024: Every Day On Markets.

SVET Markets Weekly Update (December 16 - 20, 2024)

On Week 51, the Nasdaq soared above the 22K mark for the first time. However, this upward momentum was short-lived. On Wednesday, stocks experienced a sharp decline after the Fed announced a 25 point cut but signaled fewer cuts than the market had anticipated. This led to a significant sell-off. The Dow marked its longest streak of downfall since 1974. Dollar appreciated, reaching a 24-month high, while the Chinese yuan weakened. BTC initially reached a new ATH but then plummeted to 90K following the stock market downturn.

On Monday, the S&P and Nasdaq rose, breaking the 22K mark for the first time, driven by gains in Tesla, Broadcom, Alphabet, and Apple. However, the Dow Jones continued to decline, reflecting deterioration in the manufacturing sector. Investors are focused on the Fed's interest rate decision in two days. In the EU, production declined once again. India's trade deficit reached a record high as its economy continued to worsen. Nigeria's inflation rate surged to a near 30-year high, accelerating the pace of crypto adoption. BTC reached a new all-time high of $107K on the weekend and has since settled down, while ETH breached $4K prior to that.

Details

• The NY Empire State Manufacturing Index fell sharply in December, indicating a slowdown in business activity in New York State. While some indicators like delivery times and input prices improved, overall sentiment remains cautious. 1Y trend: "Up" (NYF)
• The private sector activity expanded at the fastest pace in ten months in December. The services sector led the growth, while manufacturing continued to contract. However, business optimism improved, suggesting a positive outlook for the economy. 1Y trend: "Up" (PMI)

Crypto

• Crypto startups have raised over $1B in venture funding since Trump's election. This surge in investment is driven by optimism around pro-crypto policies and regulatory clarity. Key areas of investment include blockchain infrastructure, DeFi, and crypto mining. (source)

World Markets

• European stocks declined as investors assessed the economic outlook and awaited central bank decisions. Weak economic data from the Eurozone and concerns about French political stability contributed to the market's downturn. Automakers were particularly hit hard due to concerns about Chinese competition. Moody’s downed France's rating to Aa3 from Aa2. Scholz received non-confidence vote, now German elections will be held late February. 1Y trend: "Up"
• The Eurozone's private sector activity contracted at a slower pace in December. While manufacturing remained weak, the services sector expanded. However, new orders declined, and job cuts accelerated. Despite this, business optimism improved slightly. 1Y trend: "Up" (PMI)
• India's trade deficit reached a record high of $37.8B in November. This was due to a surge in imports and a decline in exports. 1Y trend: "Up" (IN)
• Nigeria's inflation rate surged to a near 30-year high of 34.6% in November, driven by rising food and core inflation. This indicates a worsening cost-of-living crisis in the country. 1Y trend: "Up" (NG)

Currencies

• The Chinese yuan weakened to 7.28 as mixed economic data raised concerns about the country's economic recovery. While industrial production and fixed-asset investment showed some improvement, retail sales growth slowed down. The expected loosening of monetary policy and potential US trade pressures are also contributing to the yuan's weakness. 1Y trend: "Up, Depreciating"

On Tuesday the Dow extended its downward streak to nine days—the longest since 1978. The S&P and Nasdaq also declined. Tech stocks like Nvidia and Broadcom fell, while Tesla continued to gain. EU economic sentiment improved but remained subdued. BTC reached a new ATH of ~$108K but continued to correct as whales kept closing their positions en masse, transferring BTC holdings to corporations.

Details

• Retail sales increased by 0.7% in November, exceeding expectations. While some sectors like motor vehicles and non-store retailers saw strong growth, others like food services and clothing experienced declines. Overall, consumer spending remained weaker than average. YoY retails increased 3.8%, the highest annual growth rate since December 2023 (average: 4.74 (1993 - 2024); ATH: 52.50 (April 2021); ATL: -19.90 (April, 2020)). 1Y trend: "Up". (Census)
• Industrial production declined in November , driven by weakness in mining and utilities. Manufacturing output showed marginal growth, but concerns remain about potential trade pressures under the incoming Trump administration. 1Y trend: "Down" (Fed)
• The NAHB/Wells Fargo Housing Market Index remained at 46 in December, slightly below the expected 47. Future sales expectations rose to 66, the highest since April 2022, driven by hopes for regulatory relief post-election. Additionally, 31% of builders reduced home prices by an average of 5%, with 60% using sales incentives, unchanged from November. 1Y trend: "Side" (NAHB)

World Markets

• The ZEW Indicator of Economic Sentiment for the Euro Area rose significantly in December, driven by improved economic outlook and expectations of lower interest rates. However, current economic conditions remain weak. 1Y trend: "Down (ZEW) In October the Euro Area recorded a trade surplus of €6.81B, which didn't change the picture of EU trade situation worsening (average: 5580.29M (1999-2024), ATH: 29946.10M (July, 2015); ATL: -55050.80M (August, 2022). 1Y trend: "Down" (EU)

On Wednesday, stocks plummeted after the Fed cut interest rates by 25 basis points but signaled fewer cuts than anticipated. This sparked a market sell-off, with the S&P and Nasdaq falling by approximately 3% and 4%, respectively, while the Dow dropped 1,123 points—its longest downward spiral (10 days) since 1974. A record current account deficit was reached due to the AI-driven import of semiconductors. The euro and yuan hit their yearly minimums, while the dollar rose to a 24-month high. Meanwhile, the South Korean won reached a 16-year low amid continuing political turmoil. BTC dropped below $100K, while ETH reached $3.4K following the stock market avalanche. BTC ETFs have surpassed gold ETFs.

Details

• The Fed cut interest rates by 25 basis points in December 2024 to the 4.25%-4.5% range, but signaled fewer rate cuts (2 cuts, 50 points) for 2025 than previously anticipated (4 cuts, 100 points). The Fed also revised its economic projections upward (2.5% vs to 2% in 2024; 2025 (2.1% vs 2%); 2% for 2026), with higher core inflation growth (2024 (2.8% vs 2.6%), 2025 (2.5% vs 2.2%), 2026 (2.2% vs 2%)) and lower unemployment (2024 (4.2% vs 4.4%), 2025 (4.3% vs 4.4%), 4.3% for 2026) forecasts. 1Y trend: "Down" (FED)
• Building permits surged 6.1% in November, reaching the highest level in nearly a year. This strong growth was driven by increases in permits for single-family homes and buildings with five or more units. 1Y trend: "Down" (Census)
• Mortgage applications declined slightly to 5.4% in the week ending December 13th, following a significant surge in the previous week. While purchase applications increased, refinance applications fell due to rising interest rates. 1Y trend: "Down" (MBA)
• A record-high current account deficit of $310.9B was reached in Q3 2024. This was driven by a widening goods deficit (imports of capital goods, including computer accessories, semiconductors, and electric apparatus) and an increase in secondary income deficits. 1Y trend: "Down, Increasing" (BEA)
• Housing starts unexpectedly declined 1.8% in November, driven by a sharp drop in multi-family housing starts. While single-family home starts increased, overall housing construction activity weakened. 1Y trend: "Down" (Census)

Crypto

• BTC ETFs have surpassed gold ETFs in total assets under management, reaching $129B. This milestone, achieved in less than a year since the launch of spot BTC ETFs, signifies a shift in institutional investor preferences towards BTC. (source)

World Markets

• Eurozone inflation rose slightly to 2.2% in November. While energy price declines slowed, inflation for services and food eased. Core inflation remained steady at 2.7%. 1Y trend: "Down" (EU)
• Argentina's unemployment rate fell to 6.9% in the third quarter of 2024, reaching its lowest level since Q4 2023. 1Y trend: "Down" (AR)

Currencies

• The dollar surged to a 24-month high after the Fed cut interest rates by 25bps but signaled a less dovish path for 2025. The Fed's hawkish outlook, along with revised economic projections, boosted the dollar against major currencies. 1Y trend: "Up"
• The South Korean won plunged to 16-year low. This was driven by a combination of factors, including the Fed's hawkish stance, the BoK's dovish outlook, and political uncertainty in South Korea. 1Y trend: "Up, Depreciating"

Comment: What's Up with the Fed?

That I am fundamentally against the existence of the Fed shall not be a secret to my readers. The Fed is a 110-year-old relic of the Marxist-Keynesian past, which was included in Stalin's and Mussolini's playbook of the 'scientific management' of all aspects of human life, first and foremost their economic and financial activities.

The real reason behind that "management" is not, of course, the desire to make people's lives better by avoiding "economic crises." In all 110+ years of the Fed's existence, they have proven to be absolutely incapable of doing so. The real reason is to gain additional and very powerful leverage to control individuals, especially those with more brains and, therefore, wealth than others.

Despite all my natural skepticism, more often than not, I can't suppress my bewilderment at how low the professional qualifications of those running this atrocious institution are and how large their preoccupation with their own bureaucratic and political egos and careers is.

That is what happened today. All fundamentals have been showing slowing production, slowing employment, and yes, even slowing consumer consumption. So, all core inflation factors were indicating that the economy is entering stagflation, especially as non-core inflation (energy and food) has started to rise since around May-June of 2024.

However, despite them saying themselves that non-core inflation is out of their reach and that the employment situation has started to look worrisome, they not only decided to cut 25 points, which was expected, instead of the urgently needed 50, but Powell also found it necessary to briskly change his outlook for future 2025 rate cuts from more-or-less dovish (4 cuts) to nearly hawkish (two cuts, maybe).

It must be absolutely obvious to anyone with expertise in economics and markets that this will lead to a swift market reaction. That is exactly what happened. Now everyone, including corporate traders, is confused as to whether the reasons for that abrupt change are more politically driven—trying to influence Trump's lower-tax-higher-tariff policies before they are actually implemented.

Indeed, if we now have a situation on our hands similar to but in reverse of that in Brazil, where Lula is fighting his central bank for his pro-spending, socialist policies, if Powell starts to fight Trump for his pro-capitalist tax-easing policies, we'll indeed have such volatility in the markets in 2025 for which any hedge manager would sell his soul.

On Thursday, equities were in the red. The Fed's hawkish outlook on future rate cuts dampened market sentiment. New macro data showed a weakening of manufacturing conditions in several regions. The dollar continued to rise, while EU markets reacted with a sharp downturn. Central bankers in both England and Japan held their key rates, citing worsening geopolitical conditions. BTC and ETH continued to fall as corporate investors, faced with market jitters, tried to secure profits in risk-on assets before the start of 2025.

Details

• Core PCE prices increased 2.2% in Q3 2024, slower than a 2.8% gain in the previous quarter. This metric averaged 3.23% since 1959, reaching a high of 11.9% in 1974 and a low of -0.8% in 2020. 1Y trend: "Down" (BEA)
• The Philly Fed Business Conditions Index went down to 30.70 in December, from 56.60 in November. This index has averaged 33.83 since 1968, reaching a high of 91.00 in 1975 and a low of -39.70 in 1973. 1Y trend: "Up" (PFed)
• The Philadelphia Fed Manufacturing Index plunged to -16.4 in December, indicating a significant weakening in regional manufacturing activity. New orders and shipments declined, while input costs remained elevated. Despite the downturn, firms remain somewhat optimistic about future growth. 1Y trend: "Down" (PFed)
• Existing home sales rose 4.8% in November, reaching an eight-month high. Increased housing inventory and job growth contributed to the rise. The median home price increased by 4.7% YoY. 1Y trend: "Side" (NAR)
• The Kansas Fed Composite Index declined to -4 points in December, down from -2 points in November. The index has averaged 5.06 points since 2001, with a high of 32.00 and a low of -30.00. 1Y trend: "Side" (KFed)
• The economy grew at an annualized rate of 3.1% in Q3 2024, exceeding previous estimates. Strong consumer spending and investment contributed to the growth. 1Y trend: "Side" (BEA)
• Initial jobless claims fell more than expected in the first week of December, easing concerns about a weakening labor market. This supports the Fed's view that further interest rate cuts may be limited. 1Y trend: "Up" (DOL)
• Net Purchases of Treasury Bonds and Notes increased by $92.1B in October. Foreign Bond Investment has averaged $10.68B since 1978, reaching a high of $175.16B in August 2022 and a low of -$310.79B in March 2020. 1Y trend: "Up" (GOV)

Crypto

• A recent poll by Emerson College shows that nearly one-third of young American voters under 40 use cryptocurrencies, with usage decreasing with age. About 20% of all registered voters have engaged with digital assets, but 81% haven't. Men are twice as likely to use crypto compared to women (26% vs. 13%). Furthermore, around one-third of Asian, Hispanic, and Black voters are involved in cryptocurrency, compared to 14% of white voters. The survey had a margin of error of ±3%. (source)

World Markets

• EU stocks fell sharply, driven by the Fed's hawkish outlook on future rate cuts. Tech and industrial stocks were hit hard. The BoE held rates steady, while the Swedish Riksbank cut rates. 1Y trend: "Up"
• The Bank of England held its key interest rate steady at 4.75% in December. While some policymakers favored a rate cut, the bank emphasized the need to maintain a restrictive monetary policy to combat geopolitical instability. 1Y trend: "Up" (BoE)
• The Bank of Japan maintained its key interest rate at 0.25% in its final meeting of the year. While one board member voted for a rate hike, the BoJ emphasized the need to carefully assess economic risks, including Americans' policies and wage growth. The bank expects a moderate economic recovery in Japan, with inflation remaining elevated. 1Y trend: "Up" (BoJ)
• Angola's economy grew by 5.5% YoY in Q3 2024, the strongest growth in nearly a decade. Key contributors to this growth included oil and gas extraction, trade, agriculture, and manufacturing. 1Y trend: "Up" (NEA)

On Friday, stocks rallied, recovering from earlier losses as core PCE prices increased the least since May. Part of the market now hopes that the Fed will reassess its stance. The dollar fluctuated near a 2-year high. EU consumer confidence reached a 6-month low. The Bank of China kept its rates unchanged. UK car production dropped to ATL since 1980. BTC and ETH attempted to recover after falling ~10% and ~25%, respectively.

Details

• Annual PCE inflation rose to 2.4% in November, slightly below expectations. Since 1960, PCE inflation has averaged 3.29%, reaching a high of 11.6% in 1980 and a low of -1.47% in 2009. Core PCE inflation rose 0.1% MoM in November, the smallest increase in six months. Annual core PCE inflation unexpectedly remained steady at 2.8%. 1Y trend: "Down" (BEA)
• The University of Michigan consumer sentiment index rose to 74 in December, the highest level since April , driven by improved expectations for future economic conditions. While consumers believe the economy has improved, inflation concerns remain. 1Y trend: "Up" (UMC)

Crypto

• The American stock market has surpassed $64T, adding $40T in 10 years, and reaching 74% of the World's market. Tech giants have fueled this growth. (source)

World Markets

• Eurozone consumer confidence fell to -14.5 in December, reaching a six-month low. This decline was slightly worse than expected, with consumers becoming less optimistic about the economic outlook. 1Y trend: "Up" (EC)
• Brazilian consumer confidence declined in December, reaching a six-month low. This was primarily driven by worsening expectations for the future, likely influenced by rising interest rates and inflationary pressures, particularly on food prices. 1Y trend: "Up"
• The People's Bank of China kept its key lending rates unchanged in December. This follows a pledge to increase the budget deficit and shift to a "moderately loose" monetary policy next year to boost economic growth. The central bank also indicated potential for further reserve requirement ratio (RRR) cuts. 1Y trend: "Down" (PBC)
• UK car production plummeted 30% in November, reaching a 44-year low. Falling demand and concerns about government EV targets are impacting the industry. Automakers are urging the government to support the sector and review regulations to avoid factory closures. 1Y trend: "Side" (Smmt)
• Japan's core inflation rose to 2.7% in November, exceeding expectations. This continues a period of inflation above the Bank of Japan's 2% target, influencing its monetary policy decisions. While the BoJ maintained rates in December, the central bank remains cautious about potential future hikes. 1Y trend: "Up" (JP)

Currencies

• The dollar index eased from 2-year high of 108.5 as lower-than-expected core PCE inflation raised hopes for further Fed rate cuts. 1Y trend: "Up"

On Week 52, following the FOMC's announcement, expect a pause in macroeconomic data. Key reports to watch include Durable Goods Orders and New Home Sales for November, providing insights into manufacturing and housing. Additionally, the API Crude Oil Stock Change will offer trends in energy supplies, while Initial Jobless Claims will give insights into the labor market. Lastly, the Goods Trade Balance Advanced for November will be crucial for understanding trade dynamics.

SVET Markets Weekly Update (December 9 - 13, 2024)

On Week 50, equities were mixed, with the Nasdaq reaching new ATHs while the S&P and Dow declined ahead of the Fed's rate decision. Core inflation remained steady at 3.3%. Although prices for services such as shelter and transportation slowed, overall core inflation remained elevated. Producer prices increased unexpectedly.

In international news, the ECB cut its key interest rate, while China's Politburo announced a shift to a "moderately loose" monetary policy stance for 2025. The Indian rupee hit a record low. Gold prices rose, driven by China's decision to loosen monetary policy and ongoing geopolitical tensions in the Middle East.

Notably, BTC and ETH slowed down as many whales began to take profits after BTC reached a historic milestone of $100K.

On Monday, major indexes declined by more than half a percentage point, marking their third straight loss. Nvidia fell amid a Chinese anti-monopoly investigation. Other tech stocks were affected as well, with Palantir, MicroStrategy and Coinbase down up to 10%. Investors are now eyeing Wednesday's inflation report for cues on potential Fed rate cuts. EU equities rebounded sharply as traders anticipated a drastic rate cut by the ECB on Thursday, driven by a rapidly weakening economy. Copper prices surged on promises of stimulus from China. BTC and ETH dropped like a rock due to massive de-risking by corporate traders prompted by geopolitical events.

Details

• Consumer inflation expectations for the year ahead rose to 3% in November. Expectations increased for medical care, college education, and the three-year/five-year outlook. However, expectations declined for gas, food, and rent. 1Y trend: "Side" (NYFed)

Crypto

• Google's new quantum computing chip, Willow, can solve complex problems exponentially faster than traditional supercomputers. The chip's ability to reduce errors as it scales up is a significant breakthrough in quantum computing. While not an immediate threat to crypto encryption, Willow represents a major step forward in quantum technology.(source)

World Markets

• The Stoxx 50 and Stoxx 600 rose on Monday as investors awaited the ECB's rate cut decision. China's pledge for more accommodative policies boosted European stocks, particularly luxury brands. Volkswagen gained despite ongoing labor strikes. 1Y trend: "Up"
• China's Politburo announced a shift to a "moderately loose" monetary policy stance for 2025, signaling increased economic stimulus. This move, along with pledges for fiscal support and property market support, aims to counter economic slowdown and achieve the 5% GDP growth target. The announcement also comes amid potential US trade tensions. (PBC)
• Mexico's annual inflation rate slowed to 4.55% in November 2024, the lowest since March. Prices for housing, food, and non-alcoholic beverages slowed, while transportation costs accelerated. Core inflation also eased. 1Y trend: "Side" (MX)
• Australia's NAB business confidence index plummeted to -3 in November, driven by declines across most industries. Business conditions worsened, and forward orders fell. While labor and purchase costs increased, product and retail price growth slowed. NAB expects soft growth in Q4 2024. 1Y trend: "Side (NAB)

Commodities

• Copper futures surged to a one-month high, driven by China's announcement of more supportive economic policies. The Politburo's pledge for a "moderately loose" monetary policy and "more proactive" fiscal stimulus boosted optimism for increased manufacturing demand in China, the world's top copper consumer. 1Y trend: "Up"

Comment: What's Up With Syria?

The collapse of Syria’s regime was influenced by economic challenges, but these alone do not fully explain the downfall. Many countries have endured worse economic conditions and remained politically stable.

Syria's GDP grew by 1.3% in Q4 2021, rebounding from the 2013 low of -30%. Despite slow recovery, GDP averaged 3.14% annually from 1971 to 2021. Slow growth contributed to public discontent but was not uniquely catastrophic compared to other nations.

Unemployment fell to 13.5% in 2023 from a 2020 high of 15.3%, yet it remained far above the 8% seen in 2011. Rising unemployment fueled frustration but was not worse than rates in many other developing nations.

Inflation dropped to 120.4% in 2024 from a peak of 188.4% in 2021, far exceeding the historical average of 16.68%. Hyperinflation added strain, but examples like Argentina show higher inflation rates do not always topple regimes.

The trade deficit reached a record 17,383,055 SYP million in 2022, driven by a collapsed export sector, while the current account deficit improved drastically to -170 USD million in 2020. The trade deficit hurt elite support, while the improved current account reflected a temporary, misplaced optimism.

The personal income tax rate remained at 22% despite high inflation and unemployment. Rigid taxation alienated businesses but was not the primary cause of the regime’s collapse.

While Syria’s economic troubles—unemployment, inflation, and trade collapse—undoubtedly destabilized the regime, they do not fully explain its downfall. Many nations with worse conditions have maintained stability, pointing to a broader set of political and systemic factors driving the collapse.

On Tuesday, equities continued to decline as traders de-risked due to geopolitical concerns. Market sentiment became volatile, as some investors were worried about the state of the economy despite promises from the upcoming White House administration. They were also awaiting the release of the consumer inflation report, which added to concerns about tech stocks like Oracle and Nvidia. However, positive news from Alphabet and Tesla helped offset some of the negative impact. The market remains near record highs. China's Politburo reaffirmed its loose monetary policy, leading to a slump in bond prices, while gold prices rose due to increased purchases by China. Cocoa is on a run again due to seasonal winds. Some OG crypto traders are taking profits, following stocks, which is leading to BTC and ETH fluctuating near their ATH levels.

Details

• In November, the NFIB Small Business Optimism Index surged to 101.7, its highest since June 2021, up from 93.7 in October and exceeding predictions. This marks the first time in 34 months that the index has surpassed the 50-year average of 98, driven by presidential election outcomes. Business owners are optimistic about favorable tax policies and inflation relief, with a net 36% expecting economic improvement, the highest since June 2020. 1Y trend: "Up" (NFib)
• Nonfarm business sector labor productivity increased by 2.2% in Q3, the highest level this year. Both output and productivity increased across the business and manufacturing sectors. (BLS)

Crypto

• Argentina has approved crypto ETFs, allowing investors to trade Bitcoin, Ethereum, and other cryptocurrencies on the stock market. This move aligns with President Milei's libertarian policies and aims to modernize Argentina's financial system, attract foreign investment, and provide domestic investors with new investment opportunities.(source)

World Markets

• China's 10-year government bond yield held steady at 1.89% as investors awaited the start of the annual Central Economic Work Conference, where leaders will review the economy and set priorities for the year. Recently, the Politburo reaffirmed its "moderately loose" monetary policy for 2025 and pledged proactive fiscal measures to boost consumption and stabilize markets. This approach echoes China’s response to the 2009 financial crisis, reflecting a commitment to address current economic challenges. 1Y trend: "Down"

Currencies

• The dollar index rose to a two-week high as investors anticipate rate cuts from the Bank of Canada and ECB. Rising US inflation expectations and a strong jobs report have also supported the dollar. However, the market is still pricing in a potential Fed rate cut this month, creating uncertainty for the dollar's future direction. 1Y trend: "Side"

Commodities

• Gold prices rose above $2,660 per ounce, driven by China's decision to loosen monetary policy and geopolitical tensions in the Middle East. Increased demand for safe-haven assets and China's gold purchases further supported the price increase. Investors are now looking towards inflation data for clues on future Fed policy. 1Y trend: "Up"
• Silver prices rose to a one-month high, driven by China's announcement of increased economic stimulus. The expectation of a Fed rate cut also contributed to the rise in silver prices. 1Y trend: "Up"
• Cocoa futures surged to a multi-month high (>$10,200) due to concerns over supply shortages in West Africa. Dry weather conditions and a larger-than-expected global deficit have contributed to the price increase. 1Y trend: "Up"

Comment: What's Up With France?

Is the current political disorder in France explained by the worsening economic situation?

The CAC 40 rose 1.3% to 7,427, marking its highest point in nearly a month, with a weekly gain of 2.8%. France's GDP grew by 1.2% year-on-year in Q3 2024, up from 0.9% previously, yet remains below the historical average of 3.04% and higher than the EU average. Unemployment edged up to 7.4%, still lower than the 10% highs of 2014, but reflective of a stagnant trend compared to previous declines. Inflation stood at 1.3% in November 2024, historically low when compared to the early 1980s highs of over 13%. The current account deficit widened to EUR 2.6 billion, while the government budget deficit was 5.50% of GDP in 2023, trending worse than the historical average but better than the 9% deficit recorded in 2020. Manufacturing indicators reflected continued contraction, with the PMI at 43.1, indicating a 22-month contraction period.

Despite the economic data suggesting stagnation, the political turmoil is attributed more to a generational shift and societal discontent rather than solely economic hardships, reflecting a broader narrative shaped by geopolitical tensions and issues surrounding immigration.

On Wednesday, the Dow declined, while the S&P rose and the Nasdaq reached a new ATH, boosted by a better-than-expected inflation report. Tech stocks, led by Alphabet, Tesla, and Nvidia, fueled the rally. The yuan fall on expectations that China may weaken its currency in response to potential tariffs. Argentina's inflation dropped to a yearly low due to Milei's libertarian reforms. BTC rose above 100K, while ETH reached 3.8K.

Details

• Core inflation remained steady at 3.3% in November, meeting market expectations. While prices for services like shelter and transportation slowed, overall core inflation remained elevated. 1Y trend: "Down" Annual inflation rose to 2.7% in November, driven by higher food and energy prices. Overall inflation remains elevated. 1Y trend: "Down" (BLS)
• The budget deficit for November reached $367B, a 17% increase from the previous year. This was largely due to calendar adjustments and increased government spending. The cumulative deficit for the fiscal year so far is a record high of $624B. 1Y trend: "Down, Increasing" (TR)

Crypto

• Florida's $185.7B pension fund is set to invest $1.85B in BTC, aiming to be a leader in cryptocurrency adoption. This move, backed by state leaders and the Florida Blockchain Business Association, could pave the way for wider use of digital assets in state financial planning. The potential for an additional $1.16B investment from the state's surplus further strengthens Florida's commitment to BTC. (source)

World Markets

• Argentina's annual inflation rate decreased to 166% in November (a yearly low), down from 193% in October. While this marks a decline, inflation remains at historically high levels. 1Y trend: "Side" (AR)
• The Central Bank of Brazil raised its interest rate by 100 basis points to 12.25% to combat persistent inflation (a year high). The decision was influenced by domestic economic strength and concerns about global economic conditions. 1Y trend: "Side" (BCB)
• Net foreign direct investment in the Philippines declined by 36.2% YoY in September. However, equity capital increased, primarily from Japan, the US, and Singapore. For the first nine months of 2024, FDI inflows rose by 3.8%. 1Y trend: "Down (BSP)

Currencies

• The offshore yuan weakened as concerns grew about potential tariffs on Chinese goods. China may consider weakening its currency to offset the impact of these tariffs. Investors are also awaiting the outcome of the Central Economic Work Conference for clues on China's economic policies. 1Y trend: "Up"

Commodities

• Crude oil prices rose 2.5% due to the EU's new sanctions on Russian oil. However, concerns about weaker global demand, particularly from China, and increased US fuel inventories limited the price gains. 1Y trend: "Side"

On Thursday, equities fell following a hotter-than-expected inflation report, and despite the Department of Labor reporting a three-month high spike in jobless claims. Adobe dropped the most, plunging almost 14% after providing a disappointing outlook. The euro fell as the ECB cut its rate by 25 basis points, while the Indian rupee depreciated to its record low. BTC and ETH, both just under their ATHs, moved sideways as traders took a pause amid the stock tumble.

Details

• Initial jobless claims surged to a three-month high of 242K in the first week of December, indicating a potential weakening in the labor market. This unexpected rise could impact the Fed's monetary policy decisions. 1Y trend: "Up" (DOL)
• Producer prices increased unexpectedly by 0.4% MoM in November, driven by higher food and energy costs. The annual producer price inflation rate also accelerated. While core inflation remained steady, it remains elevated. 1Y trend: "Up" (BLS)

Crypto

• BlackRock suggests that a 1-2% BTC allocation in a diversified portfolio can offer similar risk to holding major tech stocks. The asset manager highlights BTC's potential for diversification and its relatively low correlation with other assets, despite its volatility. (source)

World Markets

• India's annual inflation rate eased to 5.48% in November, remaining within the central bank's target range. While food prices moderated, overall inflation remains elevated, potentially delaying the start of a rate-cutting cycle. 1Y trend: "Up" (Mospi)
• The European Central Bank cut its key interest rate by 25 basis points in December, as expected. While inflation is expected to gradually decline, the ECB remains cautious and will adjust its policy stance based on incoming data. Economic growth is projected to be slower than previously anticipated. 1Y trend: "Side" (ECB)

Currencies

• The Indian rupee hit a record low of 84.9 against the US dollar due to capital outflows and expectations of a rate cut by the RBI. India's slower-than-expected economic growth and China's stimulus package also contributed to the rupee's weakness. 1Y trend: "Up, Depreciating"

Commodities

Comment: What's Up With Germany? (2)

The DAX continues to perform well, closing at a record high of 20,429. Major manufacturers like BMW (+2%) and Rheinmetall (+1%) have buoyed market sentiment, signaling optimism for stockholders. However, GDP contracted 0.3% year-on-year in Q3 2024, marking five consecutive quarters of minor decline. Compared to historical contractions, such as -7% in 2008 and -11% post-WWII, this stagnation seems minor.

Inflation sits at 2.2% (November 2024), far below peaks like 8% in 2022 and 11% in 1951, while unemployment remains steady at 6.1%, historically moderate compared to 12% during 1997 or 2007 crises. Despite these manageable figures, Germany’s business climate has sharply deteriorated.

The Ifo Business Climate Indicator fell to 85.7, levels reminiscent of 2008’s financial crisis. SMEs face significant regulatory hurdles, with bureaucratic priorities focused on social spending over economic productivity. Government budget deficits, now at 2.5% of GDP, reflect unproductive expenditures that fail to bolster entrepreneurial activity.

Consumer confidence mirrors this decline. The GfK Consumer Climate Indicator dropped to -23.3, with income expectations at a nine-month low. Rising insolvencies and a lack of support for SMEs have left consumers pessimistic about the future.

Germany’s current political troubles stem not from severe economic contraction but from a rigid bureaucratic system unwilling to adapt. By neglecting SMEs and entrepreneurial freedom, Germany's administration has prioritized short-term stability over long-term growth, exacerbating discontent among businesses and consumers alike. Unlike historical downturns, today's issues are driven by systemic stagnation, not insurmountable economic hardships.

On Friday, equities were mixed, with the S&P and Nasdaq hovering around flat. Tech stocks like Nvidia and Marvell surged, while other giants like Meta and Amazon declined. The broader market was cautious ahead of the Fed's interest rate decision on Wednesday next week, as import prices suddenly jumped. The Chinese economy deteriorated further, as reflected in a sharply decreased number of new loans and the absence of stimulus from the CCP. The Japanese yen declined due to the BoJ's dovish stance amid slowing production. BTC (at $100K) and ETH (at $3.9K) are slowly pushing toward all-time highs (ATHs). Crypto adoption in Nigeria has exceeded 80%.

Details

• Import prices increased by 1.3% YoY in November, up from 0.6% in October. This marks the highest annual growth rate since July 2008. 1Y trend: "Up"(BLS)

Crypto

• Cryptocurrency ownership is rising globally. More than 50% of respondents in Nigeria (84%), South Africa (66%), Vietnam (60%), the Philippines (54%) and India (50%) reported owing a crypto wallet in 2024. Turkey (44%) and the USA (43%) rank lower. (source)

World Markets

• European stocks declined as investors assessed the ECB's rate cut and China's economic outlook (contrary to expectations China’s Economic Work Conference ended without specific details on the policies). Despite a move by Macron appointing Bayrou - pro-EU centrist Boomer, concerns about economic growth and inflation weighed on the market. 1Y trend: "Up" Industrial production in the Euro Area declined by 1.2% YoY in October. This indicates a continued slowdown in manufacturing activity in the region although with a slowing speed of decline. 1Y trend: "Up" (source)
• Chinese banks extended less than 50% new loans in November than in the previous year (1.2T CNY), indicating weak credit demand despite the central bank's efforts to stimulate the economy. 1Y trend: "Down" (CN)

Currencies

• The Japanese yen weakened to a two-week low against the dollar as market expectations for a rate hike by the Bank of Japan declined on worsening economy. The central bank's cautious stance on further tightening and improving economic sentiment in Japan contributed to the yen's weakness. 1Y trend: "Up, Weakening"

On Week 51, key economic events include the Fed's interest rate decision, inflation data, and Chinese economic indicators. Central banks in the UK, Japan, and several other countries will also announce their policy decisions. Additionally, various economic data releases from the US, Europe, and Asia will be closely watched by investors.

Comment: What's Up with EU? (2)

The EU, which was first launched in the post-war period as an economic union and worked effectively to combat communism, has been transformed by lazy, entitled, and overall ineffective Brussels bureaucrats into a human progress-slowing machine.

There are two main types of people: those who think every day about how to make the world a better place and those who think every day about how to make the world a better place for themselves. We refer to the first group as producers and the second as bureaucrats. Producers create; bureaucrats cannot do that because they lack the abilities to do so. Instead, they scheme to position themselves atop the producers to "manage" them based on an innumerable array of "ideologies" which bureaucrats steal from creators. To maintain their power over producers, bureaucrats use coercion and demagoguery.

Over the past 5,000 years, bureaucrats have always prevailed over producers by exterminating them in various types of wars and concentration camps. However, in the past ten years, producers finally invented the algorithmic consensus mechanism, which allows them to manage themselves without bureaucrats. In the past three years, bureaucrats have tried to exterminate those who invented and employed these mechanisms, but they have not succeeded.

EU bureaucrats have been at the forefront of efforts to eliminate decentralized algorithms by smearing and "regulating" them. However, as a result, these bureaucrats have demonstrated once again that all they can do is to imprison people—achieving nothing.

As a result of these bureaucrats being in power for the past 30 years since the European Union was created, the economy of this union has drastically underperformed compared to the less regulated transatlantic cousins' economies. Moreover, EU bureaucrats, through their outrageous stupidity and arrogance, have managed to turn their allies into enemies and spark almost a nuclear conflict in the midst of their continent. All the individuals directly responsible for this still cling to power with all their might, despite their incompetence being apparent to everyone.

However, those who will replace them—thoughtless henchmen—are even more dangerous, and their ascent to power will lead to a complete disassembly of the European Union. But it will cost Europeans dearly, who will pay for their mental laziness with both money and blood.

In a time of impending global wars, the world needs a military coordinated but economically and politically decentralized Europe. Economics must be governed by direct democracy based on the consensus mechanism facilitated by machines. War must be conducted by several leaders, each of whom can be controlled by consensus and replaced quickly if needed, and that war must be won with high technologies produced by liberated producers and inventors not by blood of recruits.

The advance of bureaucratic class must be stopped if the world wants to continue to exist.

SVET Markets Weekly Update (December 2 - 6, 2024)

On Week 49, equities rose, with the S&P and Nasdaq setting new records, reflecting growing economic optimism as we moved into December. Economic sentiment reached a 21-month high; however, the surge in unemployment and a continued decrease in manufacturing activity have created confusion among traders.

In the Eurozone, the manufacturing sector worsened in November, contributing to a decline in French stocks amid concerns over a potential no-confidence motion in the government. Meanwhile, the yuan weakened to a one-year low, further complicating the economic landscape.

The South Korean won experienced a significant decline following declaration of martial law, while the Brazilian real plunged to a record low. This depreciation was driven by rising inflation expectations, concerns over fiscal policy, and potential tariffs on Brazilian goods.

In the cryptocurrency market, total market capitalization is approaching $4 trillion, fueled by Bitcoin's impressive surge past $100K and Ethereum's rise above $4.1K, positioning it to challenge its ATH. Additionally, spot BTC ETFs have surpassed Satoshi's holdings, reflecting growing institutional interest in the digital asset space.

On Monday equities rose to a new ATH as tech stocks continued to lead the Trump rally. Traders keep disregarding fundamentals reflected in worsening manufacturing data. Investors are now focused on the upcoming jobs report and Fed speeches. French stocks dropped on the threat of a no-confidence motion. The yuan weakened to a one-year low. BTC lingered under 97K as traders continued to accumulate, and ETH stayed above 3.6K.

Details

• The Manufacturing PMI was revised upward to 49.7 in November, indicating a stabilization in the sector. New orders declined less sharply, and employment increased. Input cost inflation eased, while output prices rose slightly. Business confidence improved due to the election results and expectations of stronger economic growth. 1Y trend: "Up" (PMI)

Crypto

• Crypto trading volume reached a record high of $2.71T in November, driven by increased institutional investment and the growth of DeFi. This surge in activity has benefited crypto exchanges and could lead to further innovation and adoption of digital currencies. (source)

World Markets

• The Eurozone manufacturing sector worsened in November, with production, new orders, and employment declining sharply. Key economies experienced significant downturns, while business confidence remained subdued. 1Y trend: "Up" (SP). The Euro Area's unemployment rate remained steady at 6.3% in October, holding at a record low. 1Y trend: "Down" (EU)
• The CAC 40 fell 1% due to political uncertainty in France. The threat of a no-confidence motion against the government weighed on investor sentiment, particularly affecting financial and automotive stocks. 1Y trend: "Side"
• Spain's manufacturing PMI fell to 53.1 in November, signaling slower growth. While international sales increased, production and new orders softened due to weather disruptions. Employment and purchasing activity also slowed. Despite these challenges, business confidence remained strong. 1Y trend: "Up" (SP). Spain's vehicle sales increased by 6.5% YoY in November. 1Y trend: "Up" (Anfac)
• South Africa's manufacturing PMI fell to 48.1 in November, indicating a contraction in factory activity. Weakening demand, rising interest rates, and global uncertainties contributed to the decline. 1Y trend: "Side" (ZA)
• Brazil's manufacturing PMI fell to 52.3 in November, indicating slower growth. While new orders remained strong, output, exports, and employment growth slowed. Input and output price pressures eased, but remained elevated. 1Y trend: "Up" (PMI)

Currencies

• The offshore yuan weakened to a one-year low of 7.31 due to a stronger US dollar, trade tensions, and concerns over China's economic growth. Weak PMI data and expectations of further Chinese stimulus measures also contributed to the yuan's decline. 1Y trend: "Up, Depreciating"
• The Brazilian real weakened to a record low of 6.06 per USD in December. Rising inflation expectations, concerns over fiscal policy, and potential tariffs on Brazilian goods contributed to the depreciation. Reduced Chinese demand for Brazilian commodities further exacerbated the situation. 1Y trend: "Up, Depreciating"

Comment: What's Up with Tariffs and Presidents? (2)

The further in a forest, the more ridiculous the White House sounds in both senses. First, an incoming president threatens 100% tariffs on BRICs if they come out with an alternative to the USD currency. Why do they think BRICs want out of the dollar area? Maybe because it is 'weaponized' by tariff threats? Why is the number of BRICs participants growing like never before in its history? Might it be because their economies have grown out of the 'sandboxes,' and now their elites are thinking of claiming parts of this world for themselves? So, what might be a smart strategy in this situation? Could it be getting more allies on your side? How do you get long-term allies? Perhaps not by 'blackmailing' them, right?

The second 'move' is from an outgoing president pardoning his own sibling after swearing he would never do that :) By the way, that came right after the same person promised to submit his post to a 'younger generation' and then, without pause, stated on all cameras, 'mmmm... rather not.' This really sounds a big bell about the current 'governance mechanism,' which is staking our fate and the fate of the Earth on capricious and unpredictable personalities. Even aside from those ridiculous events, it has been absolutely clear even 10-15 years ago that the centralized, 'wise leaders' based opaque governance mechanism is one of the last remnants of the Middle Ages, which we have to get rid of. We have already developed and proven blockchain-based algorithmic consensus, which make the implementation of direct democratic governance at all levels a question of 'ASAP.'

On Tuesday, equities closed mixed. The S&P and Nasdaq reached new highs, driven by strong tech stocks, while the Dow declined. Job market data lowered expectations of a Fed rate cut. Tesla's stock fell due to declining shipments. The South Korean won weakened after the declaration of martial law. UK retail sales reversed their previous growth as Turkish inflation marked six months of decline. BTC wavers in the 95-96K range as the rest of the major coins increased by 2%-5%.

Details

• The Logistics Manager's Index (LMI) remained above 50 in November, indicating continued growth in the logistics sector. However, growth slowed slightly compared to the previous month. Inventory levels declined, while warehousing and transportation capacity increased. Input costs and warehousing prices rose, reflecting higher inventory levels. 1Y trend: "Up" (LMI)
• Job openings increased to 7.744M in October, exceeding expectations. Job openings rose in professional and business services, accommodation and food services, and information. However, job openings declined in the Northeast and Midwest. While hires and separations remained stable, quits and layoffs were unchanged. 1Y trend: "Down" (BLS)
• Economic optimism increased in December, reaching a 21-month high. Confidence in government economic policies improved significantly. However, personal financial outlook and six-month economic outlook declined slightly. 1Y trend: "Up" (TECH)

Crypto

• South Korea has decided to delay the implementation of its crypto capital gains tax until 2027. This decision comes after initial opposition from the ruling party and concerns about its impact on the crypto market. (source)

World Markets

• UK retail sales fell 3.4% in November, reversing previous growth. Weak consumer confidence, delayed Black Friday, and Storm Bert's impact contributed to the decline. All retail categories and regions experienced a downturn. 1Y trend: "Down" (BRC)
• Australia's current account deficit narrowed to AUD 14.1B in Q3, but remained in deficit for the sixth consecutive quarter. Lower export prices and weaker global demand contributed to the smaller surplus in goods and services. While net primary income improved, net secondary income worsened. 1Y trend: "Down" (AU)
• Turkey's annual inflation rate declined to 47.09% in November, marking the sixth consecutive month of slowing inflation. While overall inflation eased, food prices accelerated. Core inflation also declined. 1Y trend: "Down" (TR)
• South Africa's GDP grew by 0.3% YoY in Q3, missing market expectations. This marks a slower pace of growth compared to previous quarters. 1Y trend: "Down" (ZA)
• Brazil's GDP grew 4.0% in Q3, driven by strong performance in industry and services. While agriculture contracted, household consumption and investment grew significantly. Exports increased, but imports grew faster, leading to a wider trade deficit. 1Y trend: "Up" (BR)

Currencies

• The South Korean won weakened significantly after President Yoon Suk Yeol declared martial law. The currency later recovered slightly after authorities intervened. Inflation remained below the central bank's target, leading to recent interest rate cuts. Investors are awaiting final GDP figures for further insights into the economy. 1Y trend: "Up, Depreciating"

On Wednesday, all three major indices reached record highs, with the Dow closing above 45K for the first time. Positive tech sector performance and strong earnings reports boosted market sentiment. On the other hand, Powell stated that he isn’t hurried to cut interest rates. Notable corporate movements included Salesforce rising 11.1% and Marvell Technology jumping 23%. The yuan strengthened after the Bank of China’s moves. The Brazilian real also strengthened as market confidence in the fiscal policies rose. BTC is approaching 99K while ETH is on a run, rapidly moving to 3.9K.

Details

• The Composite PMI rose to 54.9 in November, reaching a 31-month high. While manufacturing output declined, the services sector grew strongly. New orders increased, and input price inflation eased. 1Y trend: "Up" (PMI)
• Private businesses added 146K jobs in November, a slowdown from the previous month. While service sectors like education, trade, and professional services saw job growth, manufacturing shed jobs. Wage growth for both job-stayers and job-changers increased. 1Y trend: "Side" (ADP)

Crypto

• Indonesia's cryptocurrency market has seen a significant surge in 2024, with transaction volumes reaching $30B. This represents a 350% increase compared to the previous year. The recovery is attributed to easing regulatory pressures and increased investor interest. (source)

World Markets

• The Eurozone Services PMI was revised slightly higher to 49.5 in November, indicating a contraction in service sector activity. New business declined, while employment growth continued. Input and output prices increased at a faster pace, and business confidence weakened. 1Y trend: "Up" (PMI)
• South Africa's consumer confidence declined slightly in Q4, but remains high compared to recent years. Positive developments like government stability, lower inflation, and interest rate cuts have boosted consumer sentiment. 1Y trend: "Up" (ZA)

Currencies

• Powell highlighted US economic resilience amid inflationary pressures, with the dollar index steady at 106.3. ISM Services PMI dropped to 52.1 in November, while ADP reported 146,000 private sector jobs added. Market expectations now lean towards a 75.5% probability of a December rate cut, with attention turning to the upcoming jobs report for further economic insights. 1Y trend: "Side"
• The offshore yuan strengthened to 7.29 per dollar after the People's Bank of China set a stronger daily fixing. This move aimed to stabilize the currency amid a stronger dollar and ongoing trade tensions. While the manufacturing PMI showed improvement, the services PMI weakened, highlighting uneven economic recovery in China. 1Y trend: "Up, Depreciating"
• The Brazilian real strengthened after recent declines, as Finance Minister Haddad expressed confidence in the fiscal package and its potential impact on fiscal stability. Strong GDP growth in Q3 also supported the currency. However, concerns remain about the implementation of the fiscal package and its impact on economic growth. 1Y trend: "Up, Depreciating"

Comment: What's Up With The World? (2)

USA - D.O.G.E; China - keeps thinking harder about invading Taiwan; Ukraine - the war moves closer to nuclear warhead deployment; Middle East - calm before a storm; Germany - coalition collapse; France - government almost ousted; Brazil - fiscal crisis; Argentina - Milei's reforms face opposition; S. Korea - president is about to be fired - and all of that just in the past 30 days, and all of it is accompanied by cool, "business-as-usual" commentaries in mass media. Let me tell you that it is not "usual" at all.

In fact, that's the most widely spread heated geopolitical situation of our lifetime. Those who follow me know that in my sporadic publications, I've been commenting on the worldwide generational crisis since 2017, and I'm not alone. Today, there are literally hundreds of accomplished political and economic analysts stating that we're on the verge of a fundamental world turning. I know that 99% of you would disregard that message, again, and it's "normal". In fact, exactly that gives me hope that we still can miraculously land on all four wheels :). So, I'd appeal to the remaining 1% - you'd better be prepared with your portfolios. Rules of thumb: keep taking profits, and preserve at least 30-40% of all your assets in cash.

Of course, with so many things ready to go wrong at the same time, it's impossible to predict what and when "staff" will give way in the world, and how severe the consequences will be as a result. I'm not a proponent of various apocalypse scenarios. I'm sure that the world will sooner or later stabilize in a new shaky balance, as it always has in the past with a regularity of 80-100 years, as one "core" generation of politicians violently changes power with their predecessors. However, from a portfolio management perspective, my message has remained the same over the past three years - Volatility is The King.

So, again, fasten your belts, accumulate cash, be ready to quickly deploy and enjoy the ride if you can :)

On Thursday, equities closed lower as investors awaited the key November jobs report. While the S&P and Nasdaq declined slightly, tech stocks like Tesla and American Airlines saw gains. Jobless claims increased, and expectations for a Fed rate cut strengthened. Fresh EU construction data confirmed the worsening economy. International arrivals to Vietnam skyrocketed, driven by an inflow of tourists from all over the world, led by China and Russia. BTC reached 100K for the first time in human history after Chinese traders joined the efforts on yesterday's evening session and then corrected sharply in the morning as traders engaged in 'selling the news.' ETH touched 4K and dropped like a rock to 3.4K, following BTC. The crypto market capitalization is nearing $4 trillion.

Details

• Employers announced 57,727 job cuts in November, primarily driven by the automotive sector. This marks a year-to-date increase in job cuts, with challenges such as potential tariffs, competition from Chinese EV manufacturers, and leadership changes contributing to the automotive sector's struggles. 1Y trend: "Up" (CH)
• Initial jobless claims rose to 224K in the week ending November 30. While this is an increase, the overall labor market remains strong. The four-week moving average rose slightly, but non-seasonally adjusted claims decreased. 1Y trend: "Up" (DOL)
• The trade deficit narrowed to $73.8B in October, as both exports and imports declined. Exports decreased due to lower sales of industrial supplies and consumer goods, while imports fell for items like computers, automobiles, and crude oil. The deficit narrowed with major trading partners like China, Mexico, Canada, and the EU. 1Y trend: "Down, Increasing" (BEA)
• International arrivals to Vietnam surged 38.8% YoY in November, reaching a five-year high. Visitors from Asia (mainly led by China (68%), South Korea (26%), Japan (21.4%), and Taiwan (25.5%)), America (specifically from the US (16.5%)), Europe (particularly from Russia (89.1%), the UK (20.3%), and France (30.4%)), Australia, and Africa all increased. 1Y trend: "Up" (GSO)

Crypto

• The total cryptocurrency market capitalization is nearing $4T, driven by BTC's surge past $100K. Increased institutional adoption and positive regulatory developments are fueling this growth.

World Markets

• The Eurozone Construction PMI fell to 42.7 in November, indicating a worsening contraction in the sector. New orders declined sharply, leading to job cuts and reduced input buying. While cost pressures increased, business confidence remained subdued. 1Y trend: "Up" (PMI)
• Euro Area retail sales increased 1.9% YoY in October, slightly above expectations. 1Y trend: "Up" (EU)
• Spain's industrial production increased by 1.9% YoY in October, exceeding expectations. Capital goods output rebounded strongly, while growth in other sectors eased. 1Y trend: "Up" (ES)
• The French Construction PMI rose slightly to 43.7 in November 2024, but remained below the 50-point threshold, indicating continued contraction. While residential construction showed some improvement, commercial and civil engineering work declined. Input costs increased, and business confidence remained pessimistic. 1Y trend: "Up" (PMI)
• The German Construction PMI fell to a 2.5-year low of 38 in November. Housing and commercial activity declined sharply, and new orders fell due to fewer opportunities and high prices. Input costs rose, but subcontractor rates declined. Employment continued to fall, and business sentiment worsened. 1Y trend: "Up" (PMI)
• UK new car registrations fell 1.9% YoY in November. While electric vehicle registrations increased, sales of petrol and diesel vehicles declined. 1Y trend: "Down" (SMMT)

On Friday, equities rose, with the S&P and Nasdaq setting new records. A stronger-than-expected jobs report for November increased expectations of a Fed rate cut. Tech stocks led the rally, while healthcare stocks declined due to the death of a major industry executive. The unemployment rate increased to the second highest level in three years, while consumer sentiment reached a five-month high, continuing to confuse bears. The EU GDP growth rate increased but remained below 1%. The world's food price index reached a ten-month high, driven by vegetable oil and dairy products. BTC rose above $100K again, with ETH surging above $4.1K and poised to challenge its ATH. Spot BTC ETFs have surpassed Satoshi's holdings.

Details

• The unemployment rate rose to 4.2% in November - the second highest in 3 years - as the labor force participation rate declined. 1Y trend: "Up. The broader U-6 unemployment rate, which includes discouraged workers and underemployed individuals, rose to 7.8% in November. 1Y trend: "Up (BLS)
• Consumer sentiment rose to a five-month high of 74 in December. Current conditions improved significantly, driven by perceptions of favorable buying conditions for durables. However, future expectations declined slightly. Inflation expectations increased for the year ahead but decreased for the five-year outlook. 1Y trend: "Down. (SCA)

Crypto

• Spot BTC ETFs have surpassed Satoshi Nakamoto as the world's largest Bitcoin holder, accumulating over 1.1 million BTC. This milestone highlights the growing institutional interest and adoption of BTC. (source)

World Markets

• The FAO Food Price Index rose 0.5% in November, reaching a 10-month high. Vegetable oil prices surged, while dairy prices increased slightly. Cereal and sugar prices declined, and meat prices edged down. 1Y trend: "Up" (FAO)
• The Eurozone GDP grew 0.9% YoY in Q3, marking the best performance since Q1 2023. 1Y trend: "Up" (ES)

Currencies

• The Indian rupee remained near record lows around 84.6. The RBI maintained the key repo rate but lowered the cash reserve ratio to ease liquidity and support growth. Despite this, the rupee is pressured by a strong dollar and concerns over India's slowing economy. The central bank also lowered its GDP growth forecast and raised its inflation forecast. 1Y trend: "Up"

On Week 50, key economic indicators will be released globally. Inflation data will be published, while central banks in the Euro Area, Australia, Canada, Brazil, and Switzerland will announce their monetary policy decisions. Other key data releases include inflation figures from various countries, China's economic indicators, Germany's trade data, UK's GDP and industrial production, and Australia's labor report and business confidence. Japan will release the Tankan manufacturing index.

SVET Markets Weekly Update (November 25 - 29, 2024)

On Week 48, the S&P and Dow both reached new ATHs driven by optimism surrounding former Trump's policies and significant inflows of foreign capital. Despite this positive market sentiment, the underlying economic fundamentals continue to show signs of deterioration. For example, in the manufacturing sector, the Richmond manufacturing index remained unchanged at -14 in November, reflecting ongoing weakness.

Internationally, the Chinese offshore yuan weakened to a three-month low amidst growing concerns surrounding upcoming trade tensions. Meanwhile, gold prices remained steady as markets closed for Thanksgiving. In the EU, economic indicators continued to decline as Brussels increased the money supply to an ATH. This has been compounded by a significant depreciation of the Euro, which fell to 1.06 in November, marking its worst monthly performance in over a year. Contributing factors include tariff expectations, sluggish Eurozone growth, and political instability in Germany and France.

In the cryptocurrency market, BTC, first, slowed, staying below 95K but then recovered to 97K, and ETH corrected slightly to 3.5K to rise again to 3.7K. Overall, the crypto markets appear to be awaiting a catalyst to propel upward into a potential 'New Year rally.

On Monday, equities were mixed as economy continued to slow down, as reflected in the decline of manufacturing indexes. Investors welcomed Bessent's nomination, anticipating the Treasury's market-friendly policies. Retail stocks like Macy's and Bath & Body Works saw significant movements. The market is expected to be less active due to the Thanksgiving holiday. The German economy is sliding down, while the Nigerian economy continues to accelerate, with the financial and banking sector expanded by 30%. BTC stumbled and eased to $95K as investors took profits and relocated some assets into secondary coins, leading to ETH's continued rise, reaching $3.6K.

Details

• The Chicago Fed National Activity Index declined to -0.40 in October 2024, indicating a weakening economy. This was driven by declines in production, employment, and personal consumption. 1Y trend: "Side" (CFed)
• The Dallas Fed Manufacturing Index improved slightly to -2.7 in November, indicating a slightly less severe contraction in Texas manufacturing activity. While the outlook for the future improved, current conditions remain weak, with declining production, new orders, and shipments. Labor market conditions were mixed, and input and output price pressures remained elevated. 1Y trend: "Up" (DFed)
• The MOEX Russia index fell to a near-year low of 2,530, driven by geopolitical tensions, capital controls, high interest rates, and weak demand from key trading partners. Russia's escalating conflict with Ukraine and China's slowing economy have negatively impacted the performance of Russian stocks, particularly in the energy and banking sectors. 1Y trend: "Down"

Crypto

• Cardano (ADA) has seen a significant price surge, tripling its market capitalization to $37.4 billion in just 17 days. This is driven by several factors, including increased regulatory clarity efforts led by Hoskinson, the integration with BTC through the BitcoinOS Grail Bridge, and the relisting on Robinhood, expanding its accessibility to retail investors. Cardano's growing DeFi ecosystem, with a record-high TVL, further contributes to its positive momentum. (source)

World Markets

• The Ifo Business Climate Index for Germany fell to 85.7 in November, indicating a decline in business sentiment. Both current conditions and business expectations worsened. The manufacturing sector experienced a decline, while the services sector showed a sharp drop in sentiment. The retail sector showed some improvement, but overall business confidence remains low. 1Y trend: "Down" (Ifo)
• Brazil's consumer confidence index rose to a one-year high in November. Improved consumer expectations boosted the overall index. This positive sentiment could allow the central bank to maintain its current monetary policy stance. 1Y trend: "Up" (source)
• Nigeria's economy grew by 3.46% YoY in Q3, accelerating from the previous quarter. The non-oil sector, particularly financial services (+30%), was the main driver of growth. The oil sector also saw an increase, but at a slower pace than the previous quarter. The economy expanded by 10% QoQ, marking a significant rebound. 1Y trend: "Up" (NG)

Currencies

• The dollar index fell, retreating from recent highs. The appointment of Scott Bessent as Treasury Secretary eased market concerns about potential economic instability. The dollar weakened against major currencies like the euro, pound, Australian dollar, and yen. Investors are now looking towards upcoming economic data releases and Fed meeting minutes for further guidance on interest rate policy. 1Y trend: "Side"

Commodities

• Wheat futures declined towards a 10-week low due to ample global supplies. Favorable weather conditions in the US and France have improved crop prospects. While the International Grains Council lowered its global wheat production forecast, concerns about potential disruptions to Black Sea exports from the ongoing Ukraine-Russia conflict continue to provide some support for prices. 1Y trend: "Side"

On Tuesday, the S&P and Dow reached new highs on Trump-optimism and inflow of foreign capitals, despite new home sales plummeting to a 17-year low and Fed minutes indicating growing hawkishness among FOMC members. Tech stocks outperformed, while automakers and companies with exposure to Mexican trade faced declines. EU markets fell, the yuan hit a 4-month low, and the Mexican peso dropped to a 2-year base, while the Canadian dollar reached a 4-year bottom due to Trump’s threats to impose 10% tariffs on China and 25% on neighboring countries. BTC is sharply down (91K) as it follows a classic Wyckoff pattern, where large corporate traders, who currently dominate the market, are trying to shake off smaller competitors as they accumulate assets before a decisive breakout above 100K. ETH and other altcoins followed suit, while traders, facing an absence of retail buyers, were unable to maintain momentum without corporate support.

Details

• Building permits declined 0.4% in October. Multi-family permits decreased, while single-family permits increased slightly. Regional data showed declines in the Midwest, South, and West, but a significant increase in the Northeast. 1Y trend: "Down" (Census)
• Home prices rose 4.6% YoY in September, the slowest pace in a year. While some cities like New York and Chicago saw significant growth, others like Denver and Portland experienced slower growth. MoM, prices declined slightly. 1Y trend: "Up" (SP)
• New home sales plunged 17.3% in October, reaching a 14-year low. This sharp decline was primarily due to hurricanes impacting the South and ongoing affordability challenges. While the median and average sales prices increased, the inventory of unsold homes rose to 9.5 months of supply. 1Y trend: "Side" (Census)
• The Fifth District (Richmond) manufacturing index remained unchanged at -14 in November, indicating continued weakness. While some indicators like employment and wages showed improvement, others like shipments, new orders, and capacity utilization worsened. Input and output prices remained elevated. 1Y trend: "Down The Dallas Fed general business activity index for Texas' service sector rose to 9.2 in November, indicating improved business conditions. This was driven by increased revenue, hours worked, capital expenditures, and employment. While input costs remained high, businesses were able to moderate price increases. 1Y trend: "Up (RFed)

Crypto

• Many pro-crypto candidates have won their races, with about 270 pro-crypto candidates securing seats in Congress. Election Day polling showed that nearly half of crypto voters skewed Republican, contributing to Trump's strong popular vote. DEM missed the chance to attract these voters, as their campaign focused more on opposing Trump than on crypto advocacy. (source)

World Markets

• Retail sales in Argentina increased 161% YoY in September, a significant slowdown from the previous month, as an inflationary prices push starts to dissipate. While sales grew across various categories, the pace of growth slowed down. When adjusted for inflation, retail sales actually contracted by 1.3%. 1Y trend: "Up (AR)

Currencies

• The Mexican peso dropped over 2% to above 20.7 per USD, marking its lowest level since March 2022, after Trump threatened a 25% tariff on imports from Mexico and Canada. In response, Sheinbaum proposed retaliatory tariffs. The peso has weakened by about 20% this year due to concerns over increased government spending and debt under Sheinbaum's administration. 1Y trend: "Up, Weakening
• The Canadian dollar fell nearly 1% to above 1.41 per USD, its lowest since mid-2020, following Trump's threats of increased tariffs, including a 10% hike on China and 25% on Mexico and Canada. Oil and gas remain Canada’s top exports to the US. The Bank of Canada is still expected to cut interest rates next month, but the chance of a 50bps reduction has decreased following a rise in core inflation to 2.6% in October, above expectations. 1Y trend: "Up, Weakening
• The offshore yuan weakened to a three-month low as concerns about US-China trade tensions increased. Trump's threat of additional tariffs on Chinese goods has dampened market sentiment. The PBoC maintained its cautious monetary policy stance, keeping key interest rates unchanged. Investors are looking towards Chinese PMI data for clues on the country's economic health. 1Y trend: "Up, Weakening

Commodities

• Gold prices held steady around $2,620 per ounce after the release of the Fed's November meeting minutes. The Fed expressed confidence in the ongoing decline of inflation and the strength of the labor market, suggesting a gradual path for interest rate cuts. However, uncertainties surrounding inflation and potential fiscal policies have tempered expectations for aggressive rate cuts. 1Y trend: "Up

On Wednesday, equities closed lower as investors took profits after recent gains, with tech stocks leading the downturn. Investors ignored falling PCE and a slowing economy, which plays into the hands of the Fed's doves. The economic situation in both Germany and France continued to worsen. ETH surged 10% while BTC remains in an accumulation mode.

Details

• Core PCE inflation rose by 2.1% QQ in Q3, slightly below expectations. 1Y trend: "Side(Bea)
• The economy grew at an annualized rate of 2.8% in Q3 . Personal consumption increased, driven by both goods and services. Government spending and fixed investment also contributed to growth. However, net trade had a negative impact, and inventory investment was a drag. 1Y trend: "Side (Bea)
• The Chicago PMI fell to 40.2 in November, indicating a continued contraction in economic activity. Production, employment, backlogs, and inventories declined. New orders increased slightly, and input prices moderated. 1Y trend: "Down (ISM)
• New orders for manufactured durable goods increased slightly by 0.2% in October, missing market expectations. 1Y trend: "Side (Census)
• 30-year fixed mortgage rates declined to 6.86% in the week ending November 15th. This marks the first decrease in nine weeks, following a recent increase due to Trump's election and expectations of slower Fed rate cuts. Rates for jumbo and FHA loans also decreased. 1Y trend: "Down (MBA)
• Initial jobless claims remained unchanged at 213,000 in the week ending November 23rd, below market expectations. This suggests a strong labor market despite recent rate hikes. However, an increase in non-seasonally adjusted claims and outstanding claims indicates some potential weakness. 1Y trend: "Side (DOL)

Crypto

• Brazilian lawmaker has proposed the creation of a BTC Sovereign Strategic Reserve (RESBit), potentially allocating up to $18.6B, or 5% of Brazil's international reserves. The initiative aims to diversify Treasury assets and protect against currency fluctuations, while supporting the central bank's digital currency, the Drex. The bill also seeks to modernize Brazil’s financial management, drawing inspiration from other nations successfully integrating blockchain technology. Brazil's Central Bank and Ministry of Finance would oversee the reserve, reporting on its performance biannually. (source)

World Markets

• German consumer confidence fell to a nine-month low in December. Declining income expectations, job security concerns, and a pessimistic economic outlook have dampened consumer sentiment. Purchase intentions and economic expectations have also weakened. 1Y trend: "Up" (GFK)
• Initial jobless claims in France increased to 53.6 thousand in October, a significant rise from the previous month. This indicates a worsening labor market situation in the country. 1Y trend: "Up" (FR)
• Russian industrial production grew by 4.8% YoY in October, driven by increased manufacturing output, particularly in sectors related to military production. While some sectors like electricity and raw material extraction declined, overall industrial activity showed significant growth. 1Y trend: "Side Russian retail sales grew by 4.8% YoY in October, a slower pace than the previous month. While food product sales increased, non-food product sales slowed down. On a monthly basis, retail sales declined slightly. 1Y trend: "Down Russia's GDP grew by 3.2% YoY in October, maintaining the same pace as the previous month. 1Y trend: "Down The Russian ruble plummeted to a record low, exceeding 110 per dollar. New sanctions on Gazprombank and other financial institutions have further isolated Russia from the global financial system. Additionally, relaxed capital controls and reduced forex conversion requirements have weakened the ruble. 1Y trend: "Up, Depreciating" (RU)

Currencies

• The dollar index fell 1% as investors counterweight economic data and the Fed's cautious stance on future rate cuts. 1Y trend: "Up"

On Thursday, markets are closed for Thanksgiving. EU economic indicators continue to worsen as Brussels bureaucrats pump the money supply to an all-time high, while Brazilian equities dipped due to the government's increase in taxes. Chinese stocks fell on expectations of restrictions on chip imports. BTC lost some momentum and didn't rise above 95K, while ETH corrected slightly to 3.5K. Overall, crypto markets are waiting for a catalyst to push further up into the 'New Year rally."

Crypto

• The Financial Stability Board (FSB) has identified JPMorgan Chase as the world's sole "too big to fail" bank, placing it in "bucket 4," which requires an additional 2.5% equity of its risk-weighted assets. Meanwhile, Bank of America has been downgraded from bucket 3 to bucket 2, lowering its capital requirement from 2.0% to 1.5%. Established to monitor global systemically important banks post-2008 financial crisis, the FSB highlights the ongoing regulatory framework initiated to stabilize large financial institutions. (source)

World Markets

• Spain's annual inflation rate rose to 2.4% in November, 3-rd month in a row, driven by higher energy prices. Core inflation eased slightly. Monthly inflation slowed, and EU-harmonized inflation remained stable. 1Y trend: "Side" (ES)
• The Euro Area's M3 money supply increased by 3.4% YoY in October, reaching a record high of 16.577T. This marks an acceleration from the previous month's growth. 1Y trend: "Up". The Euro Area Economic Sentiment Indicator increased slightly in November. While confidence in industry and retail trade improved, it declined in services and consumer sectors. Germany and Italy saw a decrease in sentiment, while other major economies experienced improvement. 1Y trend: "Side". Consumer confidence in the Euro Area declined in November, reaching a five-month low. Consumers have a pessimistic outlook on the overall economy and their personal finances. While their past financial situation is stable, future expectations are weak. However, there's a slight improvement in major purchase intentions. 1Y trend: "Up" (EU)
• The Ibovespa fell 2.4%, reaching a multi-month low. Investors reacted negatively to Brazil's new fiscal package, which raised concerns about its impact on the budget deficit and economic growth. Financial stocks and other sectors were significantly impacted by the news. 1Y trend: "Side"
• Chinese stocks fell, with the Shanghai Composite and Shenzhen Component declining. Increased US-China trade tensions and potential US semiconductor export restrictions dampened investor sentiment, especially in the technology sector. 1Y trend: "Side"

On Friday, equities closed higher, with the S&P 500 and Dow reaching new ATHs. Tech stocks, particularly semiconductor companies, rallied on news of less stringent export restrictions to China. Retailers also gained due to strong Black Friday sales. In the EU, inflation continued to rise, indicating stagflation as the Euro fell to a yearly low. India's GDP slowed further, marking a year of contraction, with the rupee at a record low. At the same time, the Brazilian economy continued to show growth, with record employment, although it experienced a real depreciation of 20% YoY, driven by increasing government spending. BTC is slowly aiming to reach $100K again, while ETH has started to consolidate under $3.7K, with $4K already on traders' minds.

Crypto

• The Trump administration plans to expand the CFTC's authority to oversee significant parts of the $3 trillion digital asset market, aiming for a more innovation-friendly regulatory framework. The CFTC would regulate spot markets for major cryptocurrencies like BTC and ETH while overseeing trading exchanges. Supporters believe the CFTC's expertise in derivatives markets positions it well for this role. The initiative is part of a larger effort to shift US financial regulation and counter the SEC’s stringent policies. (source)

World Markets

• Euro Area consumers expect inflation to rise over the next 12 months, reversing a downward trend (it increased for the first time in 9 months to 2.5%). However, expectations for economic growth have worsened, while unemployment expectations have improved slightly. 1Y trend: "Down". Eurozone inflation rose to 2.3% in November 2024, driven by a smaller decline in energy prices compared to last year. Core inflation remained steady at 2.7%. Month-over-month, prices fell slightly. 1Y trend: "Down". (EU)
• German unemployment remained stable at 6.1% in November (11.5% in Apr 1950, 0.5% in Feb 1966, 11.7% in Dec 1997, 12.1% in Mar 2005, 5% in Jan 2019). While joblessness increased slightly, it was below expectations. However, job demand weakened, signaling a slowing labor market. 1Y trend: "Up" (source)
• India's GDP grew at a slower pace of 5.4% in Q3 (6.5% previous), missing expectations. The slowdown was primarily due to weaker manufacturing and utility sectors. While services and agriculture sectors showed growth, the overall economic momentum softened. 1Y trend: "Down" (Mopsi)
• Turkey's GDP growth slowed to 2.1% in Q3 2024, the weakest pace in over two years. High interest rates and declining exports contributed to the slowdown. The economy contracted QQ for the first time since 2018. 1Y trend: "Down" (TR)

Currencies

• The Euro has weakened significantly (1.06) in November, its worst monthly performance in over a year, falling about 3% against the dollar. This is due to factors such as tariffs expectations, weak Eurozone growth, political instability in Germany and France, and prognosis of ECB rate cuts. Despite recent inflation data, concerns about economic stagnation and geopolitical risks persist, leading to a bearish outlook on the Euro. 1Y trend: "Side"
• The Brazilian real strengthened after hitting a record low (6.05, 20% decline YoY), following reassuring statements from political leaders regarding fiscal policy. The country's strong labor market, with unemployment at a record low (6.2%), also supported the currency. However, weaker global demand for Brazilian commodities from China and reduced capital inflows continue to put pressure on the real. 1Y trend: "Up, Depreciating"
• The Indian rupee hit a record low of 84.6 per dollar due to slower-than-expected GDP growth, capital outflows, and a stronger dollar. Concerns about the RBI's monetary policy stance and global geopolitical tensions further weakened the rupee. 1Y trend: "Up, Depreciating"

On Week 49, key economic indicators will be released, including the November jobs report, Fed speeches, and various manufacturing and consumer sentiment data. Globally, GDP data from South Africa, Brazil, and Australia, along with unemployment rates from the Euro Area and Canada, will be released. Additionally, manufacturing and services PMIs from various countries, including China, South Korea, and European nations, will be closely monitored. India's interest rate decision and inflation data from several countries will attract traders attention.

Comment: What's Up With Tariffs and D.O.G.E?

In the 5th (Richmond) Fed District, we see a pattern similar to nearly all other districts: the manufacturing sector is declining while the services sector is rising, with employment remaining stubbornly steady.

There seems to be a plausible explanation for this employment stability: corporations are hesitant to lay off employees primarily due to political reasons. With Washington bureaucrats consolidating their power and initiating legal battles against major businesses, executives are keeping a low profile to avoid antagonizing the political elites, who seem oblivious to the principles of a free market.

As for the new Administration starting January 20, it’s hard to reconcile their claims of a dramatic shift toward "liberating" businesses and "de-bureaucratizing" Washington while simultaneously appointing multiple "czars," which inherently centralizes bureaucratic power and meddles in areas that have remained relatively free.

Now, regarding the decline in manufacturing, remedying this with tariff policies is, from an economic perspective, utterly absurd. The primary reason manufacturing shifted overseas was to cut costs due to excessive bureaucracy and high labor expenses. Imposing tariffs will not change this; such trade wars will only lead other countries to retaliate with their own tariffs. The idea that a country can thrive while being closed off from exports and resources is sheer lunacy. Just think back to the sudden shortages of protective masks and toilet paper in 2020.

The real reasons behind the manufacturing decline stem from local and global economic downturns driven by reckless and delusional "my-turf-first" policies of Boomers generations of megalomaniacs and feudal-type bureaucrats, along with the Fed's misguided, lawyer-driven approach to rate hikes aimed at "de-inflation." A reminder from Japan: the Bank of Japan maintained a negative interest rate throughout and had consistently lower inflation rates than the EU and the Americas, while the Fed's aggressive hikes have decimated manufacturing and investment worldwide.

Now, they expect us to believe they can fix all that gigantic stagflation mess in a year or two by targeting "aliens," building towering walls, and, yes, pumping up D.O.G.E. :)

If we're discussing the positives to balance the negatives, I can only point out that we have even more ridiculous "leaders" on the other side of the Atlantic. Their "regulate-and-then-think" approach has ensured that capital is fleeing to the "less-dirty-shirt" side of the ocean. This influx of capital will sustain the markets for a while, but what happens after that?

That's why I advocate for the creation of a new, 100% libertarian country where people with both capital and intelligence can live freely without hereditary politicians and bureaucratic interference.

And please don’t tell me that this is impossible or idealistic, especially considering more than 120 million "displaced" people begging for someone to take them in. Not to mention, the money, practical experiences of running tremendous companies / organization, knowledge and technology we all possess today.

SVET Markets Weekly Update (November 18 - 22, 2024)

On Week 47, equities closed positively, buoyed by ongoing "Trump trade" momentum, despite mostly subdued economic fundamentals. The dollar remained strong at a two-year high, as oil, gold, and silver prices surged due to heightened geopolitical tensions. This week saw Ukraine using supplied long-range weapons inside Russia, following Russia responding with long-range ballistic missile strikes on Ukraine.

Brent crude oil prices rose sharply as tensions escalated in the EU. Gold prices rebounded following a weakening dollar and continued geopolitical unrest. Conversely, the Euro dipped to a one-year low, impacted by concerns regarding trade tariffs and geopolitical developments, which weighed on investor sentiment.

In the cryptocurrency market, BTC approached the 100K mark, while Ethereum (ETH) surged to 3.4K. Additionally, SEC Chair Gary Gensler announced his resignation, effective January 20, 2025, stirring speculation in regulatory circles.

On Monday, stocks closed mixed, with the S&P and Nasdaq rising by about half a percent, while the Dow fell slightly. The tech sector was led by Tesla's +5% increase amid potential regulatory easing for self-driving cars. Apple and Netflix also gained. Foreign investors increased their holdings of domestic securities, with a record inflow in September, but caution prevails following Powell's remarks. The dollar remains at a two-year high as oil, gold, and silver prices rise due to sharply increased geopolitical tensions, with Ukraine receiving the approval to use supplied long-range weapons inside Russia. BTC (91K) and ETH (3.1K) are in the green but remain subdued as investors continue to accumulate, with a growing number anticipating BTC to surpass the landmark 100K level before January.

Details

• The NAHB/Wells Fargo Housing Market Index increased to 46 in November, the highest in seven months. Builders are optimistic about future market conditions due to potential regulatory relief under the Republican administration. This optimism is reflected in increased sales expectations and a slight decrease in price cuts. 1Y trend: "Side" (Nahab)
• Foreign investors increased their holdings of securities by $398.4B in September, with Treasuries reaching a record high ($8.673T, 15.4% higher than a year ago). This reflects strong demand for home assets amidst global economic uncertainty. Residents also increased their foreign investments. 1Y trend: "Up" (TR)

Crypto

• MicroStrategy purchased 51,780 Bitcoin in just one week for $4.6 billion, raising its total holdings to 331,200 BTC valued at over $29 billion. Funded through stock sales and convertible debt, the company plans to raise $42 billion over the next three years. Its stock price, which closely mirrors BTC's movements, rose 8.48% after this acquisition. Co-founder Michael Saylor has transformed the software firm into a major BTC player as its stock remains highly correlated with BTC's price fluctuations. (source)

World Markets

• The Eurozone recorded a trade surplus of €12.5B in September. This marks a significant improvement from previous months, indicating a strengthening trade balance for the region. 1Y trend: "Up, Strengthening" (EU)
• Spain's trade deficit narrowed in September, as both exports and imports increased. Exports were boosted by food, beverages, chemicals, and consumer goods, while imports rose for chemicals, consumer goods, and food. However, lower imports of capital goods and energy products contributed to the narrowing trade gap. 1Y trend: "Up, Narrowing" (ES)

Commodities

• Brent crude oil prices rose above $71 per barrel, driven by escalating tensions between Russia and Ukraine. Concerns over potential supply disruptions due to increased attacks on Ukraine's energy infrastructure have boosted oil prices. However, weaker Chinese demand and uncertainty about the pace of Fed rate cuts have also weighed on the market. 1Y trend: "Side"
• Gold prices rebounded towards $2,600 per ounce as the dollar weakened and geopolitical tensions escalated with Ukraine using US-supplied long-range weapons inside Russia. Uncertainty surrounding the Fed's rate cut timeline and potential inflationary pressures from geopolitical events have also boosted gold's appeal as a safe-haven asset. 1Y trend: "Up"
• Silver prices rebounded above $30.50 per ounce as the dollar weakened and investors reassessed Fed rate cut expectations. The recent rally in the dollar, driven by Trump's election and potential inflationary policies, has started to fade. Investors are now looking for more clarity on the Fed's future policy moves. Additionally, rising geopolitical tensions between the US and Russia have provided some support to silver as a safe-haven asset. 1Y trend: "Up"
• Natural gas prices rose above $2.90/MMBtu due to increased winter demand and higher LNG exports. Lower domestic production and rising global demand have contributed to the price increase. However, rising US natural gas inventories could limit further price gains. 1Y trend: "Up"

Uranium futures jumped to $82 per pound after hitting a one-year low of $76.5, following Russia's export restrictions on nuclear fuel. This move responds to banning Russian nuclear fuel imports in retaliation for the Ukraine invasion. With Russia supplying nearly half of global uranium enrichment, the situation intensifies pressure on Western converters. The Sprott Physical Uranium Trust highlighted that increased production from Canada, Kazakhstan, and Namibia won't meet the 50 million pounds needed for U.S. nuclear plants. 1Y trend: "Up"

Comment: What's Up With EU?

EU equities have drastically underperformed since March. At the same time, TIC investments in Treasuries reached a historic ATH in September, which raises the question: why? Of course, the Fed's decision to maintain historically high rates for an extended period, while the ECB begins to lower them due to a looming recession in the Eurozone—especially in the manufacturing sectors of France and Germany—has played a significant role in this massive capital outflow. Additionally, rising political uncertainties in EU, along with the impact of the Trump trade, have contributed to this capital fly.

However, I argue that the situation has been further exacerbated by the generally aging and wavering state of EU bureaucracy. This bureaucracy stubbornly refuses to confront reality and continues to impose outdated agendas on EU residents—agendas that are 30 to 40 years old and increasingly inappropriate given the current political, economic, and technological landscape. The world is becoming more divided between the statist "Global South," which claims to defend "social goods" through a highly centralized governance model, and the profit-focused, capitalist, more decentralized West. The EU is trying to straddle this divide, but this approach is not working miserably. Maintaining this middle ground is costing the EU economy people and money, leading to an exodus of capital.

The latest example of the EU's outdated approach is its excessively regulatory stance toward blockchain and AI. On both fronts, the EU bureaucracy is convinced that it is entitled to dictate what is permissible based solely on its own self-designed "rules," which it promotes as "universal." However, this statist attitude is not enough to deter innovators and investors, who are fleeing from the suffocating embrace of these frightfully outdated "EU sages." And there's only one direction they can go, right?

Overall, it appears that the concept of EU unity is a thing of the long-gone past, as more countries disillusioned with the 'union' increasingly affiliate themselves either with the South or the North, leaving very few capable of maintaining the middle ground for more than a limited time. In this situation, a massive EU bureaucracy finds itself fighting tooth and nail for its own survival, which relegates all other agendas to a secondary position, grossly undermining European countries' collective progress toward peace and prosperity.

On Tuesday, equities rebounded slightly at the start of the session but ended mixed, with the tech and retail sectors leading the gains, boosted by falling housing starts and building permits that emboldened the "rate-cutters" camp. Nvidia and Tesla rose ahead of their earnings reports, while Walmart's strong results boosted its stock. However, geopolitical tensions and potential Fed rate changes remain concerns for the market. Gold rose as Russia broadened its conditions for using atomic weapons, just days after Ukraine was granted permission for long-range missile strikes on Russian territory. The dollar is holding on to profits as the euro falls to a one-year low due to geopolitics, while the yuan dropped to a 3-month low amid wavering support from the CCP for the economy. Oil prices have fluctuated as traders remained confused, caught between a rising probability of a Russian tactical nuclear strike on Ukraine—now estimated at 14% on Polimarket—and easing tensions in the Middle East. Meanwhile, BTC reached a new all-time high at 93.9K, while ETH remains stuck at 3.1K.

Details

• Building permits declined 0.6% in October, below expectations. While single-family permits increased, permits for multi-family units decreased. Regional data showed mixed results, with declines in the Midwest, South, and West, but a significant increase in the Northeast. 1Y trend: "Down" (Census)
• Housing starts fell 3.1% in October, primarily due to a sharp decline in the South. Single-family home starts decreased significantly, while multi-family starts increased. Despite the recent decline, housing starts remain challenged by rising mortgage rates and an increasing inventory of unsold homes. 1Y trend: "Down" (Census)

Crypto

• Trump's campaign prominently featured his branding as the 'Crypto President,' which many believe contributed significantly to his election success. Now, as President-elect, he is poised to fulfill his promises to the crypto industry. Following his victory, Trump met with Coinbase CEO Brian Armstrong to discuss appointments for his administration. Additionally, Trump's media company is reportedly in talks to acquire the crypto trading firm. (source)

World Markets

• Eurozone annual inflation rose to 2% in October, reaching the ECB's target. This increase was primarily due to a smaller decline in energy prices and faster growth in food, alcohol, tobacco, and non-energy industrial goods prices. Core inflation remained steady at 2.7%. 1Y trend: "Down" (EU)

Currencies

• The euro weakened to a one-year low as concerns over trade tariffs and geopolitical tensions weighed on sentiment. Additionally, ECB officials' warnings about the potential impact of tariffs on the Eurozone economy have further pressured the currency. 1Y trend: "Up, Devaluing"
• The offshore yuan weakened to a three-month low as concerns over potential US tariffs and a slowing Chinese economy persist. Investors are awaiting the PBOC's LPR decision and the Hong Kong investment summit for further clarity on China's economic outlook. Despite these headwinds, the PBOC's efforts to stabilize the currency have provided some support. 1Y trend: "Up, Devaluing"
• The Russian ruble weakened to a one-year low below 100 rub/usd as geopolitical tensions escalated following Ukraine's use of US-supplied missiles on Russian territory. Putin's updated nuclear doctrine and Russia's relaxed capital controls further pressured the currency. Additionally, concerns about slowing Chinese demand for Russian goods added to the downward pressure on the ruble. 1Y trend: "Up, Devaluing"

Commodities

• Gold prices rose 1% to $2,630 per ounce, driven by increased geopolitical tensions between Russia and Ukraine. Russia's expanded nuclear doctrine and Ukraine's use of US-supplied missiles have heightened concerns about a potential escalation of the conflict. This has led investors to seek safety in gold, despite a stronger US dollar and reduced expectations for Fed rate cuts. 1Y trend: "Up"
• WTI crude oil prices hovered around $69 per barrel, influenced by both geopolitical tensions and easing concerns. The ongoing conflict in Ukraine and Iran's nuclear deal have created volatility. However, weaker Chinese demand and potential OPEC+ production increases are exerting downward pressure on prices. 1Y trend: "Side"
• Lithium carbonate prices in China surged to CNY 79K per tonne, driven by increased demand from battery manufacturers and supply cuts. The Chinese government's subsidies for electric vehicle purchases and potential trade tensions under the Trump administration have further boosted demand. Despite high stockpiles, lithium producers have reduced output, leading to a tighter supply market. 1Y trend: "Down"

Comment: What's Up With SME?

In the situation of global "South-North" divide, entrepreneurs face two options for profit as cross-border trade in physical goods becomes more constrained. The first option is monopolization within national production boundaries and cross-border trade, which is primarily the domain of large corporations, not small and medium-sized enterprises (SMEs). The second option is to focus on seamless intellectual goods and services, which can more easily cross the divide between the South and the North.

This doesn't mean physical production won't be possible for SMEs; it simply indicates that until labor and material costs trend downward again—like they used to in a globalized scenario—SMEs won't have an advantage over large international corporations in manufacturing. They can, however, excel in the services and intellectual sectors, where SMEs can be faster and more inventive compare to larger corporations.

On Wednesday, equities closed mixed, with Nvidia's earnings report and geopolitical tensions impacting market sentiment. The S&P closed flat, while the Nasdaq declined slightly. Retail stocks, led by Target's disappointing earnings, fell sharply. Investors are also monitoring Trump's potential cabinet picks and their impact on trade policy. Gold is up due to worsening conditions on the EU war's front, while the Bank of China kept its lending rates unchanged due to inflation concerns. BTC surpassed $94K, continuing its rise toward $100K, while ETH remains in the red as traders sell it to capitalize on the BTC rally.

Details

• 30-year mortgage rates rose for the fourth consecutive week to 6.9%, the highest since early July. This increase is driven by rising Treasury yields and expectations of limited Fed rate cuts due to Trump's policies and potential inflationary pressures. 1Y trend: "Side" (MBAA)

Crypto

• The Shanghai High Court ruled that cryptoassets possess "property attributes" under Chinese law, but only as commodities, not for use as currency or business instruments. This decision arose from a fraud case involving illegal token issuance and condemned the actions of the companies involved. Despite acknowledging crypto's value as a commodity, the Court maintained a strict anti-crypto stance, citing concerns over illegal financing and potential financial system disruption. China's rigorous crypto policies remain unchanged, even amidst rising global interest in the sector. (source)

World Markets

• Eurozone construction output declined by 1.6% YoY in September. This decline reflects ongoing challenges in the construction sector, including rising costs and supply chain disruptions. 1Y trend: "Down" (EU)
• UK annual inflation rose to 2.3% in October, exceeding expectations. This was primarily driven by higher energy prices. While food inflation remained steady, services inflation accelerated. Core inflation also edged up. 1Y trend: "Down"
• Argentina recorded a trade surplus of 888M in October, a significant improvement over the previous year. Exports surged 30%, driven by agricultural and manufactured goods. Imports also increased, but at a slower pace. This positive trade balance is a result of increased global demand for Argentine commodities and improved export conditions. 1Y trend: "Side" (AR)

Currencies

• The dollar index rose to a 2-year high, driven by escalating geopolitical tensions between Russia and Ukraine. Markets are concerned about potential trade wars and their impact on global economic growth. Additionally, uncertainty surrounding the appointment of a new Treasury Secretary and the potential for further rate cuts by the ECB have also supported the dollar's strength. 1Y trend: "Side"
• The Chinese yuan weakened further, trading above 7.24 per dollar. The People's Bank of China kept key lending rates unchanged, signaling a cautious approach to further monetary easing. While the central bank remains committed to supporting economic growth, concerns about the global economic slowdown and potential US trade tensions continue to weigh on the yuan. 1Y trend: "Up, Depreciation"

Commodities

• Gold prices rebounded to $2,650 per ounce, driven by increased geopolitical tensions between Russia and Ukraine. Russia's expanded nuclear doctrine and Ukraine's missile strikes fueled concerns about a potential escalation of the conflict. While the Fed is expected to cut rates in December, the magnitude of future cuts is uncertain due to persistent inflationary pressures. 1Y trend: "Up"
• Silver prices eased to $31 per ounce, halting a recent rebound. While geopolitical tensions between Russia and Ukraine provided some support for silver as a safe-haven asset, weaker demand for industrial uses, particularly from the solar panel industry, limited price gains. Additionally, concerns about the impact of potential US tariffs on Chinese solar panels further weighed on silver prices. 1Y trend: "Side"

On Thursday, equities closed higher, with the Dow leading the gains despite major manufacturing indexes continuing their decline. After-hours trading saw positive results for Gap and Ross Stores, driven by strong earnings reports, as traders shifted towards cyclical stocks. Risk-on investors are disregarding worsening economic fundamentals and focusing on long-term perspectives, overweighting some positive but shaky data, such as strong employment and rising consumer sentiment. At the same time, markets are notably undervaluing sharply increasing geopolitical risks. Consumer confidence in the Euro Area declined, while it rose in Argentina, marking a growing success of Milei's libertarian economic reforms. BTC came a whisker close to making a historic 100K, while ETH surged 10%, jumping to 3.4K as some momentum traders quickly shifted to it from BTC. In other news, Gensler announced his resignation, effective Jan 20, 2025.

Details

• The Philadelphia Fed Manufacturing Index declined to -5.5 in November, indicating a contraction in regional manufacturing activity. While new orders and shipments remained positive, employment increased. Firms expect future growth, but inflationary pressures persist. 1Y trend: "Up" (Phil)
• Jobless claims fell to a seven-month low of 213K, defying expectations of an increase. This indicates a resilient labor market, despite recent rate hikes. The four-week moving average also declined, suggesting continued strength in the labor market. However, outstanding claims rose to a three-year high. 1Y trend: "Up" (DOL)
• Existing home sales increased 3.5% in October, rebounding from a 14-year low. The median sales price rose 4%, and housing inventory increased slightly. While the housing market shows signs of stabilization, high mortgage rates remain a challenge for first-time buyers. 1Y trend: "Down" (NAR)
• The Kansas City Fed Manufacturing Index improved to -2 in November, indicating a slight improvement in regional manufacturing activity. While this is a positive sign, the index remains in contractionary territory. 1Y trend: "Side" (KFed)

Crypto

• SEC Chair Gary Gensler announced his resignation effective January 20, 2025, coinciding with President-elect Trump's inauguration. Gensler's tenure, marked by aggressive crypto regulation and enforcement actions, ends as Trump's pro-crypto agenda begins. His departure, three months short of a 4-year term, fulfills Trump's campaign promise to remove him. The SEC credited Gensler for market reforms and investor protection, while the crypto industry anticipates a shift in regulatory approach under the new administration. (source)

World Markets

• Consumer confidence in the Euro Area declined in November, falling below its long-term average. This suggests a worsening consumer sentiment in the region. 1Y trend: "Up" (EU)
• Argentina's consumer confidence index rose to a one-year high in November. Consumers expressed increased optimism about their personal finances, the overall economy, and future purchases. However, compared to the previous year, consumer confidence remains lower. 1Y trend: "Up" (Utdt)
• Mexican retail sales declined 1.5% YoY in September, extending a five-month downward trend. While online sales increased, categories like hardware, stationery, and healthcare saw significant declines. This suggests a continued slowdown in consumer spending. 1Y trend: "Down" (MX)
• Macau's tourist arrivals increased by 13.7% YoY in October 2024 reaching 97.7% of the October 2019 level. The number of visitors from mainland China, Taiwan, and international destinations rose, contributing to the overall increase. However, the average length of stay decreased slightly. For the first ten months of the year, overall visitor arrivals increased by 28.1%. (Dsec)

Currencies

• The dollar index remained near 2-year highs, supported by concerns about geopolitical tensions and expectations of less aggressive Fed rate cuts. Fed officials' comments on inflation and the economy have added to uncertainty about the future path of monetary policy. The dollar strengthened against the Euro and Pound but weakened against the Yen. 1Y trend: "Side"

Commodities

• Gold prices rose to $2,660 per ounce, driven by increased geopolitical tensions between Russia and Ukraine. Russia's expanded nuclear doctrine and Ukraine's use of Western-supplied missiles have heightened concerns about a potential escalation of the conflict. While the Fed is expected to cut rates in December, uncertainty remains about the magnitude of future cuts. 1Y trend: "Up"
• WTI crude oil prices rose 2% to $70.1 per barrel, driven by escalating geopolitical tensions between Russia and Ukraine. The use of long-range missiles by both sides has increased concerns about a wider conflict. While OPEC+ is expected to delay output increases, rising US crude inventories may limit further price gains. 1Y trend: "Side"
• Natural gas prices surged 7%, reaching a one-year high. This increase was driven by forecasts of colder weather, leading to higher heating demand. Additionally, lower-than-expected natural gas storage levels and increased LNG exports have contributed to the price rise. 1Y trend: "Up"

Comment: What's Up With The Nukes

Currently, the markets are notably undervaluing geopolitical risks. If it's true, Russia firing an ICBM (AlJazeera) at a Ukrainian city (after Ukraine launched British Storm Shadow cruise missiles, following its use of ATACMS missiles earlier) is a very serious and unprecedented development that significantly increases (by at least 2x-3x from current ~9%) the risks of a tactical weapon deployment in the next 6-12 months.

It's, of course, difficult to predict how the market will behave if Russia decides to deploy a tactical warhead. However, we can assume it won't be as positive as in August-September 1945 (**).

According to various estimates, the least yield will be about 70 kilotons (Hiroshima was about 12 kilotons). If it is deployed in a populated area, the immediate casualties are in the hundreds of thousands (depending on how far from a concentrated population location it will explode), with potentially millions directly affected as a result of fallout.

However, that scenario is the least likely. The most considered variant is an atmospheric or underwater explosion. In that case, the casualties will be very limited, if any, but the political ramifications will be tremendous, leading to a sudden sell-off across a broad range of markets, primarily risky assets. In that scenario, BTC might drop at least 40-50% at once.

Therefore, before geopolitical conditions clarify (e.g., due to new Trump initiatives), it's advisable to keep taking some profits regularly and maintain a portion of cash readily available.

*) There has been no confirmed instance of Russia deploying an intercontinental ballistic missile (ICBM) equipped with a conventional (non-nuclear) warhead against a foreign city.

**) When the United States dropped atomic bombs on Hiroshima (Monday, August 6, 1945) and Nagasaki (Thursday, August 9, 1945), the immediate reaction of the stock markets, including the Dow Jones Industrial Average, was influenced by the general sentiment during this period, which leaned towards optimism regarding the end of the conflict. After the surrender of Japan and the formal end of World War II on September 2, 1945, the stock market saw a boost, reflecting hopes for economic recovery and peace.

On Friday, equities closed higher as purchasing managers index showed growth in services sector. Investors rotated from tech stocks to cyclicals such as financials, industrials, and consumer discretionary. Nvidia and Alphabet declined, while Tesla and Walmart gained. The market is awaiting the announcement of Trump's pick for Treasury Secretary. The dollar hit a two-year high due to the ongoing Trump trade, while the Euro touched a one-year low as the EU economy slows down. BTC is still holding below 100K, waiting for a catalyst to break through, while ETH pushes toward 3.4K again.

Details

• The S&P Global Composite PMI rose to 55.3 in November, indicating strong growth in the private sector. The service sector expanded significantly, while manufacturing continued to contract. New orders increased sharply, and firms' expectations for the coming year are optimistic. However, employment declined for the fourth consecutive month. 1Y trend: "Up" (PMI)
• Consumer sentiment rose to a seven-month high in November. However, post-election sentiment was more moderate than initially expected. While inflation expectations for the year ahead remained low, long-term expectations increased. Uncertainty about the implementation of Trump's economic agenda persists. 1Y trend: "Up" (SCA)

Crypto

• Prior to the recent BTC surge MicroStrategy had made a significant $4.6B investment in BTC, acquiring 51,780 coins. This brings the company's total BTC holdings to over $29B. MicroStrategy's stock price is closely tied to BTC's performance, reflecting investor interest in the company's BTC strategy. (source)

World Markets

• The Eurozone's composite PMI fell to 48.1 in November 2024, signaling a contraction in private sector activity. Both manufacturing and services sectors experienced declines, driven by falling new orders and increased input costs. Businesses reduced their workforce due to lower demand. The outlook for the year ahead remains uncertain. 1Y trend: "Side" (PMI)
• The French manufacturing PMI fell to a 22-month low of 43.2 in November. This indicates a sharp contraction in manufacturing activity, driven by falling orders and weak demand. Input prices rose while output prices declined, squeezing profit margins. The outlook for the French manufacturing sector remains bleak. 1Y trend: "Down"
• India's manufacturing PMI fell slightly to 57.3 in November, but remained in expansionary territory. Strong new orders and output growth contributed to the positive reading. However, rising input costs led to increased output prices. 1Y trend: "Up"
• Japan's annual inflation rate fell to 2.3% in October, the lowest in six months. This decline was mainly due to slower increases in energy prices. However, core inflation remained elevated at 2.3%. Monthly inflation increased by 0.4%. 1Y trend: "Side" (JP)
• Mexico's GDP grew 1.6% YoY in Q4. This marks a continued recovery, but growth remains below an average levels (an average for a period 1994 - 2024 is 2.07%). 1Y trend: "Side" (MX)
• Argentina's economic activity contracted 3.3% YoY in September. While some sectors like mining and quarrying showed growth, others like utilities, construction, and manufacturing continued to decline. Seasonally adjusted data indicated a slight increase in economic activity. 1Y trend: "Down" (Indec)

Currencies

• The dollar index rose to a 2-year high (107.5), driven by a weaker euro and expectations of a less dovish Fed. The Eurozone's weak PMI data and rising geopolitical tensions have also supported the dollar's strength. The market is now focused on Trump's policies and their potential impact on inflation and interest rates. 1Y trend: "Up"
• The euro fell to a one-year low as concerns about the Eurozone's economic outlook intensified. Weak PMI data, geopolitical tensions, and potential risks from trade disputes have weighed on the currency. The ECB's concerns about financial stability and economic shocks have also contributed to the euro's weakness. 1Y trend: "Down"

Commodities

• WTI crude oil prices rose above $71.1 per barrel, driven by stronger demand expectations. The US S&P PMI showed strong growth, and China announced measures to boost foreign trade. However, weaker Eurozone PMI data and geopolitical tensions between Russia and Ukraine could limit price gains. 1Y trend: "Side"

Week 48 will be busy for investors, with several key economic indicators and central bank decisions. Data releases include FOMC meeting minutes, PCE inflation, GDP growth, consumer confidence, and housing data. Global economic data will include inflation figures from various European countries, GDP data from India and Canada, and interest rate decisions from South Korea and New Zealand.

Comment: What's Up With Market Risks?

The risk-off market sentiment seems to be driven solely by promises from the new White House administration to "fix the economy." However, at the moment, there is no evidence (except for unreasonably high employment and rising consumer sentiment) suggesting that the economy is heading towards a different direction than stagflation. While stocks and other equities often rise in an inflationary environment, there's no guarantee of other underlying factors of economic growth, such as increased productivity and corporate profits.

SVET Markets Weekly Update (November 11 - 15, 2024)

On Week 46, stock markets experienced declines, reversing earlier optimism as Powell indicated that strong economic growth permits a cautious approach to interest rate cuts. Core inflation remained steady, while small business optimism rose in October, buoyed by reduced uncertainty following the recent election. Nevertheless, challenges such as low sales, job vacancies, and persistent inflation remain.

The dollar index surged to a multi-month high, while gold prices fell to a one-month low as investors shifted towards riskier assets following Trump's election victory. Oil prices sharply declined due to disappointing stimulus measures from China and growing concerns about weaker global demand. India's annual inflation rate spiked, further complicating the economic landscape. Additionally, the Mexican peso weakened to a two-year low amid fears of potential protectionist policies under the new Trump administration.

In the cryptocurrency space, BTC climbed to $91K, continuing to rise independently of other markets, while ETH lagged behind at $3K.

On Monday, stocks rallied with all major indexes reaching new ATHs, driven by optimism surrounding Trump's re-election and the GOP gaining a majority in both the Senate and the House. Tech stocks, particularly Tesla and crypto-related companies, led the gains. Investors are now looking toward the comments from Fed officials and the upcoming earnings reports. The dollar is at a six-week high, while gold dropped to a one-month low as investors rush into riskier assets. Oil fell sharply, fluctuating between concerns over supply cuts from the Middle East and the weakness in demand from the Chinese economy, compounded by the anticipated "drill, baby, drill" policy. At the same time, the Chinese economy showed new signs of inherent weakness, with new loans issued by banks falling to a 15-year low. BTC and ETH continue their best run since 2021. BTC is leading the charge, nearing $88K, while ETH follows, reaching $3.4K. The rest of the crypto market is experiencing unprecedented exuberance not seen in the past four years, with some leading tokens such as Cardano nearly doubling in price within a few days as more and more latecomer traders rush into crypto.

Crypto

• BTC has surged to $88K, and prediction markets now estimate a 52% chance of it reaching $100K by the end of 2024. This optimism is fueled by Trump's election victory and institutional demand. BTC's market cap has exceeded $1.7 trillion, and is about to flip the entire silver market. (source)

World Markets

• Mexico's industrial production declined for the second consecutive month in September, driven by weaknesses in mining and construction sectors. While manufacturing output increased, overall industrial activity remained sluggish due to factors like tighter monetary policy, political uncertainty, and a weaker peso. 1Y trend: "Down". At the same time, Mexican consumer confidence reached a record high in October. Consumers expressed optimism about their financial situation and the country's economic outlook. The increased propensity to make large purchases further indicates a positive sentiment among Mexican consumers. 1Y trend: "Down" (Inegi)
• China's new yuan loans in October fell to a 15-year low of CNY 500 billion, missing market expectations. This reflects weak demand for credit and a muted response to the central bank's stimulus measures. Total social financing also came in below forecasts, indicating sluggish economic activity. 1Y trend: "Down" (PBC)

Currencies

• The dollar index rose to a six-week high on Monday, driven by expectations of Trump's pro-business policies and potential inflationary pressures. This has reduced expectations of a significant Fed rate cut in December. Investors are now focusing on key economic data releases and Fed officials' comments for further insights into the central bank's monetary policy stance. 1Y trend: "Side"
• The Mexican peso weakened to a two-years low, driven by concerns over potential protectionist policies under the Trump administration. Fears of stricter trade measures and a potential Republican-controlled Congress have increased. Additionally, expectations of interest rate cuts by Mexico's central bank and mixed economic data have further pressured the peso. 1Y trend: "Up, Weakening"

Commodities

• Gold prices fell to a one-month low as investors shifted towards riskier assets following Trump's election victory and expectations of expansionary fiscal policies. A stronger dollar and rising US equities further pressured gold. Additionally, concerns about higher inflation and potential Fed rate cuts limited gold's appeal as a safe-haven asset. 1Y trend: "Up"
• Oil prices fell sharply on Monday due to China's disappointing stimulus measures and concerns about weaker global demand. Trump's election victory and its potential impact on energy policies added to the bearish sentiment. A stronger dollar and rising production from non-OPEC countries also weighed on prices. Traders are closely watching upcoming reports from OPEC, EIA, and IEA for further clarity on the market outlook. 1Y trend: "Side"
• Natural gas prices surged over 10% as Hurricane Rafael disrupted significant production in the Gulf of Mexico. Over 25% of oil and 16% of natural gas output remains shut-in, leading to supply concerns. While the storm has weakened, it is expected to linger in the region, further impacting production. 1Y trend: "Up"

Comment: What's Up With Mexico? (2)

Mexico is experiencing a curious economic trend similar to Italy's: falling production alongside record-high consumer confidence. What’s driving this contradiction? It signals a potential global stagflation scenario.

On one hand, high central bank interest rates and a restructuring of global trade routes are causing declines in various sectors, exacerbated by uncertainties surrounding tariff wars. On the other hand, consumer confidence is being buoyed by increasing government spending and companies' reluctance to lay off workers. To retain employees in a shrinking labor pool—further impacted by reduced immigration—many corporations are offering higher wages.

This environment leads to rising inflation, which pressures central banks to maintain or even hike interest rates, completing the cycle of stagnation and inflation.

As financial authorities grapple with these issues, they will inevitably clash with populist politicians, rising to power all over the world. This conflict could extend the duration of global stagflation, complicating recovery efforts and impacting the broader economy for years.

On Tuesday, equities declined despite consumer confidence surging to a three-year high, pausing after the post-election rally. The technology and communication services sectors outperformed, while materials, healthcare, and real estate lagged. Gold and oil rebounded as the EU economic sentiment dropped and Indian inflation continued to rise. BTC (at $87K) and ETH (at $3.2K) paused as some traders chose to take some profits off the table.

Details

• Small business optimism rose to a three-month high in October, driven by reduced uncertainty following the election. However, challenges like low sales, job vacancies, and inflation persist. While sales expectations improved, they remain negative overall. 1Y trend: "Up" (Nfib)
• Consumer confidence surged in November, reaching a three-year high. The improvement was driven by positive expectations for personal finances and the overall economy. This surge in optimism followed recent political events and anticipated economic policies. 1Y trend: "Up" (TMI)

Crypto

• On November 12, 2024, BTC's surge raised El Salvador's holdings to over $500M and Bhutan's to over $1B. Bhutan's BTC assets now represent more than one-third of its GDP, while El Salvador's account for only 1.5%. Data indicates El Salvador possesses nearly 5,932 BTC, valued at approximately $516 million at the current price of $87,000. The overall financial situation for El Salvador’s government continues to improve amidst this rally. (source)

World Markets

• In November, the ZEW Indicator of Economic Sentiment for the Euro Area dropped to 12.5, falling short of the 20.5 expected. About 62.5% of analysts predicted no change in economic activity, while 25% forecasted improvement and 12.5% expected decline. The current economic situation indicator fell to -43.8, and inflation expectations rose to -13.4. 1Y trend: "Side" (Zew)
• India's annual inflation rate surged to 6.21% in October, exceeding expectations and the RBI's target range. Food prices, particularly vegetables and oils, were the main drivers of inflation. This higher-than-expected inflation rate reduces the likelihood of immediate rate cuts by the RBI. 1Y trend: "Side". India's industrial production rebounded in September, growing 3.1% YoY. Manufacturing, electricity, and mining sectors contributed to the growth. The manufacturing sector, particularly coke, basic metals, chemicals, and food products, showed significant expansion. 1Y trend: "Down" (Mospi)
• Argentina's monthly inflation rate slowed to 2.7% in October, the lowest in over two years. This marks six consecutive months of disinflation, with annual inflation easing to 193%. While most categories saw slower price growth, food and housing costs remained elevated. 1Y trend: "Down" (Indec)

Comment: What's Up With India?

Indian inflation has risen sharply, particularly in food prices, indicating increasing costs. Meanwhile, sectors with significant government involvement, such as energy and mining, are showing sporadic rebounds, likely spurred by government support. However, the Bank of India is inclined to raise interest rates to combat inflation rather than stimulate production, creating a stagflationary scenario that differs somewhat from other countries like Italy and Mexico.

The overall trend remains the same: inflation is increasing as companies avoid layoffs and continue to raise prices. In India, this situation is exacerbated by substantial government interventions, which intensify inflationary pressures and create potential tensions with the Central Bank. This situation is reminiscent of Brazil, where Lula's government confronted the Central Bank over economic policies. However, it is unlikely that this confrontation will occur in India under the strong leadership of Modi, suggesting that inflation is likely to persist.

On Wednesday, equities closed mixed. The Dow saw modest gains, while the S&P and Nasdaq declined. The consumer discretionary, energy, and real estate sectors outperformed, while technology and healthcare lagged. Investors digested October's inflation data, which met expectations but indicated ongoing inflationary pressures. Core inflation remained steady, while overall inflation increased. Both the dollar and gold rose as investors bet on higher Fed rates and higher inflation (stagflation) simultaneously. EU stocks hit a 13-week low amid a looming economic downturn, exacerbated by a significant outflow of capital across the Atlantic on Trump-trades. The Brazilian real dropped to a 3-year low on Lula's high social expenditure policies. BTC (90K) continued to push toward 100K, while ETH slowed down again, retreating to 3.1K.

Details

• Core inflation remained steady at 3.3% in October, with services inflation, particularly shelter and transportation, continuing to rise. Monthly inflation also held steady at 0.3%. These figures suggest underlying inflationary pressures persist, despite recent declines in headline inflation. 1Y trend: "Down" Meanwhile annual inflation rose to 2.6% in October, reversing the previous month's decline. While energy prices slowed their decline, shelter costs remained elevated. Monthly inflation held steady at 0.2%. 1Y trend: "Down" (BLS)
• 30-year mortgage rates rose for the third consecutive week to 6.86%, the highest since mid-July. This increase is attributed to rising Treasury yields and expectations of limited Fed rate cuts due to Trump's policies and potential inflationary pressures. 1Y trend: "Down" (MBA)
• Household debt reached a record high of $17.94T in Q3, driven by increases in mortgages, credit cards, and auto loans. While income growth has outpaced debt, elevated debt levels remain a concern. Rising interest rates and a potential economic slowdown could further strain household finances. 1Y trend: "Up" (NYF)

Crypto

• Robinhood reported a 72% increase in transaction-based revenue in Q3 2024, driven by growth in crypto, options, and equity trading. Crypto trading volumes were up YoY. The company's Assets Under Custody also increased, reflecting strong user growth and asset valuations. (source)

World Markets

• Russia's GDP growth slowed to 3.1% in Q3, down from the previous quarter. This reflects waning base effects from the 2022 crisis and weaker Chinese demand. 1Y trend: "Up" Annual inflation eased to 8.5% in October, but remains above the central bank's target. Monthly inflation accelerated to 0.8% in October. 1Y trend: "Up" (RU)

Currencies

• The dollar index surged to a multi-month high as October's inflation data met expectations. The market is now focusing on upcoming economic releases and Fed Chair Powell's speech. The dollar's strength is partly driven by "Trump trades," with investors anticipating potential inflationary policies and limited Fed rate cuts. 1Y trend: "Side"
• The Brazilian real weakened to a three-and-a-half-year low as concerns about President Lula's fiscal policies and rising inflation expectations grew. The market is worried about the government's ability to balance the budget, leading to a weaker currency. Additionally, a stronger US dollar and global risk aversion have further pressured the real. 1Y trend: "Up, Depreciating"

Commodities

• Gold prices edged higher after US inflation data came in line with expectations. While this data supports the Fed's potential rate cut in December, the market is now pricing in a less aggressive easing cycle due to Trump's policies and inflationary pressures. However, recent outflows from gold ETFs and weaker global demand have limited gold's upside potential. 1Y trend: "Up"
• Silver prices rebounded to $31 per ounce after a recent decline. This recovery was driven by expectations of further Fed rate cuts due to moderate inflation data. However, weak Chinese demand for solar panels, a major silver consumer, and potential tariffs on Chinese solar products limited the upside for silver prices. 1Y trend: "Up"
• Brent crude oil prices rebounded slightly above $72 per barrel, supported by short-term supply tightness. However, weaker-than-expected Chinese demand and concerns over potential tariffs on Chinese goods continue to weigh on oil prices. OPEC's lowered global demand forecast for 2024 further adds to the bearish sentiment. 1Y trend: "Side"

On Thursday, equities fell as investors digested mixed economic data and Powell's comments. The PPI report showed some inflationary pressures, while the Fed's stance on rate cuts became less certain. The tech and consumer discretionary sectors lagged, while energy and industrials outperformed. The dollar continued to surge on "Trump's trade" combined with hawkish comments from the Fed, while the EU manufacturing sector continues to slow down. BTC (88K) and ETH (3.1K) entered correction territory due to an absence of retail buyers, while corporate traders were quick to take profits at the first opportunity.

Details

• Powell stated that strong economic growth allows for a cautious approach to interest rate cuts. He emphasized that immediate reductions are unnecessary, as the economy remains robust and the labor market is resilient. Despite slight rises in inflation and weaker job growth in October, Powell reaffirmed the Fed's commitment to its 2% inflation target, acknowledging that the journey to that goal may be uneven. (Fed)
• Producer prices rose 0.2% MoM in October, driven by increases in services and goods. Annual PPI inflation accelerated to 2.4%, with core inflation reaching 3.1%. These figures indicate persistent inflationary pressures in the US economy. 1Y trend: "Side" (BLS)
• Jobless claims fell to a 7-month low of 217K, defying expectations of an increase. This indicates a resilient US labor market despite recent rate hikes. The four-week moving average also declined, suggesting sustained labor market strength. 1Y trend: "Up" (DOL)

Crypto

• Solana's network activity has surged. This is largely driven by increased meme coin trading and DEX bot activity. Solana's DEX, Raydium, has even surpassed Ethereum in daily fees. While this bullish sentiment is reflected in SOL's price increase, it also exposes the network to potential risks if market conditions change. (source)

World Markets

• The Eurozone's GDP grew by 0.9% year-on-year in Q3, surpassing the previous quarter's growth. This is the best performance since Q1 2023. The European Central Bank (ECB) expects the Eurozone economy to grow by 0.8% in 2024. 1Y trend: "Up" Eurozone industrial production fell by 2.8% year-over-year in September. This decline was driven by weak demand and ongoing supply chain disruptions. While the pandemic years saw extreme fluctuations, the recent trend indicates a slowdown in the Eurozone's manufacturing sector. 1Y trend: "Down" (EU)
• Brazil's economic activity accelerated in September 2024, driven by strong growth in the service sector, particularly due to the Rock in Rio festival. Industry and retail sectors also saw faster growth. This positive momentum suggests a robust economic recovery in Brazil. 1Y trend: "Up" (BR)

On Friday, equities plummeted, with the major indices down 1-2%. Investors reacted to Powell’s comments on strong economic conditions and persistent inflation, leading to lowered expectations for interest rate cuts. Retail sales rose, but industrial production continues to fall. Concerns over potential Trump appointments also affected pharmaceutical stocks. For the week, stocks saw declines, reversing earlier optimism. The dollar, gold, and oil are all trading lower due to the mixed influence of a slowing world economy and a renewed hawkish stance from the Fed. China's foreign investment declined. Meanwhile, BTC ($91K) is ignoring other markets and continues to rise, leaving ETH ($3K) far behind once again.

Details

• Retail sales grew 0.4% MoM in October, exceeding expectations. While some categories like electronics, auto dealers, and food services saw strong growth, others like furniture and clothing declined. Excluding autos and core categories, retail sales were flat. 1Y trend: "Up" (Census)
• Export prices rose by 0.8% in October, surprising markets prognosis with a significant increase. Agricultural and non-agricultural exports both contributed to the rise. However, YoY, export prices declined slightly. 1Y trend: "Side" (BLS)
• The New York Empire State Manufacturing Index surged to 31.2 in November, indicating a significant improvement in regional manufacturing conditions. New orders and shipments increased sharply, while inventories remained stable. Labor market conditions were steady, and input and selling price pressures remained moderate. Firms expressed optimism about the six-month outlook. 1Y trend: "Up" (NYF)
• Industrial production declined 0.3% YoY in October, with weakness in mining and manufacturing sectors. However, utility production increased. 1Y trend: "Side"(Fed)

Crypto

• Franklin Templeton has launched its first tokenized money market fund, FOBXX, on the ETH blockchain. This allows investors to invest in government securities via blockchain technology. The fund currently holds $429.74M in assets. (source)

World Markets

• Italy's trade surplus widened slightly in September, as both imports and exports declined. Lower energy imports and capital goods contributed to the narrower trade deficit. However, sales to key markets like Germany, France, and the US also weakened. 1Y trend: "Up" (Istat)
• China's foreign direct investment (FDI) declined by 29.8% YoY in October. While this marks a slight improvement from September, it continues to reflect the challenging global economic environment and geopolitical tensions. 1Y trend: "Down" (CN)

Currencies

• The dollar index slipped slightly but remains near a 2-year high. A strong economy, supported by robust retail sales and manufacturing data, has led to expectations of a less dovish Fed. This, along with Powell's comments, has reduced the likelihood of a rate cut in December, boosting the dollar. 1Y trend: "Up"

Commodities

• Crude oil prices fell 2.4%, pressured by weak Chinese demand and a stronger dollar. OPEC and the IEA both lowered their global oil demand forecasts. Additionally, rising US crude inventories added to the bearish sentiment. 1Y trend: "Side"
• Gold prices fell to a one-month low (its worst weekly performance since June 2021) as the dollar strengthened and expectations for Fed rate cuts diminished. Powell's comments on the economy and inflation dampened hopes for a more dovish monetary policy. Concerns about potential inflationary pressures under Trump's administration weighed on gold prices from the other side. 1Y trend: "Up"

On Week 47, key economic indicators will be released, including building permits, initial jobless claims, and the Philadelphia Fed Manufacturing Index for November. The Kansas Fed Manufacturing Index and S&P Global Composite PMI Flash will also be featured. Additionally, speeches from Fed officials Goolsbee and Hammack are expected. In the Eurozone, final core inflation rates and CPI figures will be announced, alongside consumer confidence data and a speech from ECB President Lagarde, as well as the HCOB Composite PMI Flash for November.

SVET Markets Weekly Update (November 4 - 8, 2024)

On Week 45, the past week was marked by significant market volatility, primarily driven by the Trump's win. The S&P and Dow surged nearly 5%, buoyed by expectations of pro-business policies under new administration. The Fed's 25 basis point rate cut further fueled the rally.

However, underlying economic indicators were mixed. Manufacturing activity weakened, while the Eurozone manufacturing sector continued to contract. China unveiled plans to ease local government debt, but the broader economic outlook remains uncertain.

In the commodity markets, oil prices declined due to concerns over global demand, particularly from China. Gold prices remained relatively stable, supported by geopolitical uncertainties and potential inflationary pressures.

Crypto continued their upward trend, with BTC approaching the $77K level and ETH touching ~$3K for the first time in four months. The broader crypto market benefited greatly from the Trump's Rally, too.

On Monday, equities fell amid a weakening manufacturing sector, with major tech stocks leading the decline as some traders exited the markets prior to the elections. However, after-hours trading presented a mixed picture. Palantir soared on strong earnings, while NXP Semiconductor plunged due to a weak outlook amid broader economic concerns. The dollar and gas prices fell, while gold rose as uncertainties continued to prevail. BTC (66K) and ETH (2.4K) are down but remain stable.

Details

• Factory orders declined in September, continuing a downward trend. Both durable and non-durable goods sectors saw decreases, indicating a weakening manufacturing sector. This aligns with other economic indicators showing a slowdown. 1Y trend: "Side" (Census)

Crypto

• Michigan's State Retirement System has diversified its crypto investments. It has increased its holdings in ETH ETFs, particularly Grayscale's ETH Trust and ETH Mini Trust. This move, especially after the recent SEC approval of BTC ETFs, signifies growing institutional interest in ETH. (source)

World Markets

• The Eurozone manufacturing sector continued to contract in October, but at a slower pace than in previous months. While production, sales, and job losses decreased, the rate of decline slowed. However, business confidence reached a one-year low. 1Y trend: "Up" (PMI)

Currencies

• The dollar weakened as polls showed a tighter presidential race. This eased concerns about inflationary policies and led investors to reduce positions benefiting from higher interest rates. The Fed is expected to cut rates on Thursday, balancing inflation and economic slowdown risks. 1Y trend: "Side"

Commodities

• WTI crude oil futures rose 3% to $71.50 per barrel after OPEC+ postponed output increases by a month, extending cuts of 2.2M bpd into December due to falling prices and weak demand. Concerns about potential Iranian retaliation against Israel are also influencing the market. Attention is on the upcoming presidential, and economists expect a 25 bps interest rate cut from the Fed on Thursday amid China's plans for economic stimulus. 1Y trend: "Side"
• Gold prices stabilized around $2,740 per ounce on Monday after two days of decline, supported by a weaker dollar as markets prepared for the presidential election and Fed decisions. Polls show a tight race, and the Fed is expected to announce a modest 25 bps interest rate cut this week, amid rising tensions in the Middle East boosting gold's safe-haven appeal. 1Y trend: "Up"
• Natural gas prices dropped due to several factors: lower geopolitical tensions in the Middle East, record-high domestic production, and milder weather forecasts. These factors reduced demand and increased supply, leading to the price decline. 1Y trend: "Up"

On Tuesday, stock futures rose as election results began to emerge. Harris is expected to win Vermont, while Trump is projected to take Kentucky, Indiana, and West Virginia. Investors are also watching the balance of power in Congress, which may affect spending and tax policies. Additionally, markets anticipate a 25 basis point rate cut from the Fed. In regular trading, the Dow, the S&P, and the Nasdaq increased by 1-2%, with strong gains across all sectors. Gold held steady while oil and the Mexican peso rose due to global political uncertainties. Economic activity in key EU member countries continues to slow down. BTC is surging over $70K on expectations of Trump's victory, leaving ETH far behind at $2.5K.

Details

• Business activity grew slightly in October, driven by the services sector. However, manufacturing continued to decline, and employment decreased across both sectors. Encouragingly, price inflation eased, suggesting reduced cost pressures. 1Y trend: "Up" (SP)
• The trade deficit widened in September due to increased imports and decreased exports. Imports of goods like pharmaceuticals, computers, and cars rose, while exports of products like pharmaceuticals and aircraft declined. This widening deficit suggests a slowdown in the economy. 1Y trend: "Down, Deficit Increasing" (BEA)
• The Logistics Manager's Index rose in October, indicating strong growth in the sector. Warehousing and transportation utilization increased, while transportation capacity improved. However, inventory levels and costs grew at a slower pace. Overall, the logistics industry is showing positive signs of recovery. 1Y trend: "Up" (LMI)
• Vehicle sales rose to 16M in October, up from September. This is a significant increase from the pandemic low of 8.48M in 2020 but below the ATH of 21.71M in 2001 (16-17M is a long-time medium). 1Y trend: "Up" (NADA)

Crypto

• Polymarket, a prediction platform on Polygon, has reached a record open interest of over $463M, fueled by betting on the 2024 Election Day. Tuesday was its busiest trading day, with $174M in volume, surpassing the previous high of $161 million. Since its launch in 2020, Polymarket has gained significant popularity as a gauge of public sentiment. Currently, it shows Trump at a 62% chance of winning against Harris, despite polls suggesting Harris may have a slight edge. (source)

World Markets

• France's industrial production fell in September, marking the first decline since May. Both manufacturing and other sectors saw decreased output. While the quarterly trend remains positive, the monthly data suggests a slowdown in industrial activity. 1Y trend: "Side" (Insee)
• Spain's unemployment rose slightly in October, though it remains at a 17-year low. While most sectors saw increases, construction experienced a decline. Youth unemployment rose significantly. Despite the monthly increase, annual unemployment figures show a 5.7% decrease. 1Y trend: "Side" (ES)
• The UK service sector continued to grow in October, but at a slower pace. New business growth slowed, and export sales accelerated. However, rising costs and uncertainty about the upcoming budget led to increased prices and decreased business confidence. 1Y trend: "Down" (SP)

Currencies

• The Mexican peso weakened due to political uncertainty. Concerns about a potential negative Supreme Court ruling on judicial reform and the possibility of Trump's return to the presidency have weighed on the currency. While Mexico's economic data, such as stable unemployment and strong GDP growth, could support some rate cuts, the political risks are currently overshadowing these positive factors. 1Y trend: "Up, Depreciating"

Commodities

• Brent crude oil futures climbed to $75.5 per barrel amid uncertainty from the presidential election, following a 2.9% rise the previous day due to OPEC+ delaying a planned production increase. Market attention is on the election results and China's National People’s Congress, where additional stimulus may be introduced. OPEC+'s decision was influenced by weak demand and rising non-OPEC supply, while a tropical storm in the Gulf could cut U.S. oil production by about 4 million barrels. 1Y trend: "Down"
• Gold prices remained steady above $2,730 per ounce as markets awaited the presidential election results. Speculation that a Trump presidency could lead to higher inflation has prompted investors to view gold as a hedge against inflation. However, the close election race has moderated these expectations. Additionally, the Fed's anticipated quarter-point rate cut on Thursday is expected to support bullion by lowering the opportunity cost of holding non-yielding assets, bolstered by hopes of similar moves from other central banks. 1Y trend: "Up"

On Wednesday, stock futures remained steady following a significant rally spurred by Trump's victory. Major indices reached record highs, with the Dow, S&P, and Nasdaq gaining 3-4%. The small-cap Russell 2000 surged over 5%. Investor optimism centered on anticipated pro-business policies under a second Trump administration, bolstering sectors like financials, energy, and industrials. Meanwhile, megacap tech stocks thrived, while renewable energy and Chinese companies lagged. The dollar is up, while gold, silver, and oil are down. Brazil's Central Bank hiked its rate for the second time this year amid resurging inflation. BTC has continuously reached new ATHs as more money poured into risk-on assets, driven by traders' anticipation of Trump's pro-crypto reforms. Even ETH outperformed, surging more than 10% to $2.7K.

Details

• The average interest rate for 30-year fixed-rate mortgages rose to 6.81% for the week ending November 1, 2024, marking the highest rate since late July. This increase is attributed to rising Treasury yields and expectations that the Federal Reserve will delay lowering interest rates. Additionally, the likelihood of a Trump victory in the presidential election is also influencing rates. Jumbo loan rates reached 6.98%, while FHA-backed mortgage rates decreased to 6.75%. 1Y trend: "Side" (MBA)

Crypto

• The number of BTC millionaires surged from 121,061 on October 7 to 132,842 by November 6, adding 11,487 new millionaires. (source)

World Markets

• The Eurozone private sector stagnated in October, with manufacturing contracting and services growing at a slower pace. Germany and France experienced shrinking activity, while Spain, Ireland, and Italy saw growth. Demand weakened, and employment fell sharply. Price pressures eased, and business confidence declined. 1Y trend: "Up" (SP)
• Eurozone producer prices declined in August, driven by lower energy costs. While some goods categories saw price increases, overall, producer inflation eased. Month-over-month, prices fell significantly, indicating softening inflationary pressures. 1Y trend: "Up" (EU)
• German factory orders surged in September, driven by large-scale orders for transportation equipment. Both domestic and foreign demand increased, with a significant boost from the Eurozone. While some sectors saw declines, overall, the data points to a recovery in manufacturing activity. 1Y trend: "Side" (DE)
• France's private sector activity contracted at the fastest pace in nine months in October. Both manufacturing and services sectors declined, driven by falling new orders, especially exports. Employment decreased, and business confidence weakened. While input costs rose at a slower pace, output prices remained relatively stable. 1Y trend: "Up" (SPG)
• The Central Bank of Brazil raised its interest rate by 50 basis points to 11.25% to combat persistent inflation. The decision was influenced by concerns about inflation expectations, resilient service sector inflation, and global economic uncertainties. While the domestic economy remains strong, the bank aims to balance inflation control with economic growth. 1Y trend: "Down" (BR)

Commodities

• WTI crude oil futures remained stable above $72, recovering from an earlier drop of over 3%. Investors are evaluating the effects of Trump’s policies and recent EIA data on the energy market. A second Trump term is expected to boost economic growth and consumption, but concerns about trade tariffs hurting China's economy may reduce oil demand. Meanwhile, the EIA reported a larger-than-expected increase in U.S. crude inventories, and Gulf oil producers began evacuating workers due to Tropical Storm Rafael. 1Y trend: "Side"
• Gold prices fell below $2,670, down from the October 30 peak of $2,758, as Trump's presidential win bolstered the dollar and led investors to sell gold. The election outcome was less competitive than expected, with no contest anticipated. Markets are adjusting to expectations of higher Fed interest rates, reducing demand for gold. The Fed is expected to announce a 25bps rate cut, addressing inflation risks amid a weakening job market. 1Y trend: "Up"
• Silver prices fell below $32, the lowest in nearly a month, as Donald Trump's presidential win boosted the dollar and led investors to retract safe-haven positions. The election outcome was less competitive than expected, and market sentiment anticipated higher Fed interest rates, reducing gold demand. Trump's campaign promises of tax cuts and tariff increases raised concerns about inflation and deficits. The Fed is expected to announce a 25bps rate cut while addressing inflation and job market risks. 1Y trend: "Up"

On Thursday, equities rose, extending the post-election rally. The tech sector led the gains, fueled by the Fed's 25 basis points rate cut and hopes for reduced regulation under Trump's administration. However, bank and financial services stocks declined due to concerns about potentially higher interest rates and increased fiscal deficits. Gold, oil, and the dollar stabilized. The Eurozone construction sector continued to contract, while the Argentine manufacturing sector's decline slowed. BTC and ETH are in deep green, with ETH leading the charge for the first time in almost half a year with a 6% gain.

Details

• The Fed cut interest rates by 25 basis points to 4.50-4.75%, as expected. While the economy continues to grow and the labor market remains strong, inflation has slowed but remains above the Fed's 2% target. The Fed will continue to monitor economic data and adjust rates accordingly. 1Y trend: "Side" (Fed)
• Jobless claims rose slightly in the last week of October, but remained below recent averages, suggesting a resilient labor market. However, total claims increased, signaling potential weakness. While some states like California and Michigan saw increases, Florida experienced a decline after hurricane-related volatility. 1Y trend: "Up" (DOL)

Crypto

• France's gambling regulator, the National Gaming Authority (ANJ), is likely to block access to Polymarket. This decision reflects growing concerns about its classification as gambling under French law. Polymarket, which gained popularity during the presidential election with over $3.2B in wagers, allows users to bet on various outcomes using cryptocurrency. A French trader's significant $30M bet on Trump reportedly caught the ANJ's attention, highlighting the platform's regulatory challenges. (source)

World Markets

• The Eurozone construction sector continued to contract in October, though at a slower pace. New orders declined across sectors, leading to decreased employment and input buying. Germany experienced the sharpest decline, while France and Italy saw milder contractions. While cost pressures eased, job cuts persisted, especially in Germany and France. 1Y trend: "Down" (PMI)
• Eurozone retail sales grew 2.9% YoY in September. This is a significant increase compared to the historical average of 1.09%. While the pandemic years saw extreme fluctuations, with record highs and lows, the recent growth indicates a recovery in consumer spending. 1Y trend: "Up" (EU)
• Germany's trade surplus narrowed in September, as exports declined and imports increased. Exports to the EU and third countries, including China and the UK, weakened. Imports from the EU and non-EU countries, notably China and Russia, grew. Despite the monthly decline, Germany still maintains a significant trade surplus for the year. 1Y trend: "Down" (DE)
• The Bank of England cut its interest rate by 25 basis points to 4.75%, as expected. This decision was driven by slowing inflation, particularly in services. However, the Bank anticipates that the government's expansionary budget could push inflation higher in the short term. Despite this, the Bank forecasts a gradual decline in inflation over the medium term. 1Y trend: "Side" (UK)
• Argentine industrial production continued to decline in September, though at a slower pace. Most sectors contracted, but the rate of decline eased in some areas. Food and beverage production accelerated, and manufacturing rebounded. MoM, industrial output increased, indicating a potential stabilization in the sector. 1Y trend: "Down" (AR)
• China's exports surged in October, driven by anticipation of future tariffs. This marked the fastest growth in nearly two years, with significant increases in shipments to various regions, including the US, EU, and ASEAN. For the year-to-date, exports have grown steadily, boosted by strong performance in sectors like agriculture, electronics, and automobiles. 1Y trend: "Down" (CN)

Currencies

• The dollar index slightly recovered but remained lower at 104.5 as traders analyzed the latest FOMC decision. The Fed cut the fed funds rate by 25bps, and Powell emphasized decisions will be made on a case-by-case basis. Investors anticipate a further rate cut in December and significant cuts in 2025, while the dollar rallied 1.7% following Trump’s victory. 1Y trend: "Side"

Commodities

• Gold remained around $2,700 following a 25 basis point rate cut by the Fed. Fed Chair Powell stated that upcoming elections wouldn't affect Fed decisions, while noting that positive economic data has lessened downside risks. Markets anticipate higher interest rates due to the new president's policies aimed at increasing tariffs and cutting taxes, which could lead to larger deficits and inflation. Gold dropped 3% yesterday as Trump’s victory strengthened the dollar, prompting investors to sell. 1Y trend: "Up"

On Friday, equities rose to record highs once again, driven by optimism over Trump’s victory, a Fed interest rate cut, and surging consumer sentiment. The S&P surpassed 6,000, while the Dow reached 44,000 for the first time. Tesla's stock surged more than 8% after achieving a $1 trillion valuation. For the week, the S&P and Dow increased by almost 5%. The dollar is up while oil is down as gold holds. EU stocks fell due to a massive shift of capital to the other side of the Atlantic. The CCP revealed a plan to reduce China’s municipal debt from CNY 14 trillion to CNY 2 trillion over the next five years. Brazilian inflation continues to accelerate, and Italian manufacturing hit a year low. BTC and ETH continue to rise, with BTC testing $77K and ETH, which has seen drastic growth since the election, standing just below $3K for the first time in four months.

Details

• Consumer sentiment rose to a seven-month high in November, driven by improved expectations for personal finances and business conditions. However, current conditions weakened slightly. Inflation expectations declined for the year ahead but increased for the next five years. 1Y trend: "Up" (SCA)

Crypto

• The Ethereum Foundation released a financial report revealing a $970 million treasury, down from $1.6 billion in 2022. Most funds are in Ether (ETH), reflecting their belief in Ethereum's future. The report emphasizes conservative management and outlines new conflict of interest policies to address past issues. They also plan to focus on Layer 1 & 2 development and zero-knowledge cryptography advancements. (source)

World Markets

• France's trade deficit widened in September, reaching a 12-month high. Exports fell due to weaker sales of industrial products, transport equipment, and energy products. Imports also declined, but at a slower pace. This widening deficit reflects a challenging global trade environment and weaker domestic demand. 1Y trend: "Side" (FR)
• China's current account surplus surged to a 2-year high in Q3, driven by a record-high goods trade surplus. Weak domestic demand forced Chinese companies to export more to meet sales targets. While the services and primary income deficits narrowed, the secondary income surplus contracted. 1Y trend: "Up" (CN)
• China has implemented measures to ease local government debt burdens (CNY 14.3 Trillion in 2023), including raising the debt ceiling and allowing debt swaps. This aims to free up funds for public spending, especially as land sales, a key revenue source, have declined. While the measures provide some relief, they fall short of the expected broader fiscal stimulus.
• Brazil's annual inflation rate accelerated to 4.76% in October, exceeding expectations and the central bank's target range. Rising food and housing costs were the main drivers, fueled by drought, weaker currency, and strong economic activity. The central bank has already tightened monetary policy to combat inflation. 1Y trend: "Up" (Ibge)
• Russian car sales surged 51% YoY in October, reaching a 17-year high (av.: 150,272.48; ATH (Apr. 2008): 291,020.00; ATL (May 2022): 24,268.00). This significant increase follows a period of decline due to sanctions and supply chain disruptions. While the market is recovering, it remains below pre-pandemic levels. 1Y trend: "Up" (AEB)
• The FAO Food Price Index rose in October 2024, reaching a 10-month high. Vegetable oils, sugar, and dairy prices increased significantly, driven by factors like unfavorable weather conditions and strong global demand. Cereal prices also rose due to concerns over winter crop sowing. However, meat prices declined slightly. (FAO)
• Italian industrial production fell sharply in September, marking the steepest decline YoY. This follows a period of declining output, reflecting weak domestic and global demand. While the pandemic years saw extreme fluctuations, the recent trend indicates a slowdown in the Italian manufacturing sector. 1Y trend: "Down" (IT)At the same time, Italian retail sales rebounded strongly in September 2024, defying expectations of weaker consumer spending. Both food and non-food sales increased, marking the fastest growth in several months. This suggests that Italian consumers may be more resilient than initially anticipated. 1Y trend: "Down" (IT)

Comment: Reconciling Contradictory Economic Indicators in Italy

The recent economic data from Italy presents a puzzling picture, with falling industrial production on one hand and soaring retail sales on the other. Here are three potential explanations for this apparent contradiction:

1. Inventory Adjustments: Businesses may be reducing their inventory levels to align with slower demand, leading to decreased production. At the same time, consumers may be increasing their spending on goods and services, driving up retail sales. This could be a temporary adjustment phase as businesses adapt to changing economic conditions.

2. Sectoral Shifts: The decline in industrial production may be concentrated in specific sectors, such as manufacturing, while other sectors, like services, may be experiencing growth. This could be due to factors such as global trade tensions, technological advancements, or shifts in consumer preferences. Retail sales, on the other hand, may be driven by growth in sectors like hospitality, tourism, or e-commerce.

3. Statistical Discrepancies: There may be statistical discrepancies or measurement errors in the data, leading to inaccurate conclusions. It's important to consider the methodology used to collect and process the data, as well as potential biases or limitations. Further analysis and clarification from statistical agencies may be necessary to fully understand the underlying trends.

In my opinion, the first two factors are more likely to be at play. This is supported by data from the EU, where the service sector continues to grow. However, over time, as the economy adjusts and potential stagflation takes hold, retail sales growth may also slow down.

Currencies

• The dollar index rose to 104.7, ending the week 0.4% higher. Investors evaluated the impact of the Fed's recent 25 bps rate cut and Trump's election win on interest rates and growth. Powell hinted at uncertainty regarding future rate cuts, with a nearly 68% chance of another cut in December. Meanwhile, consumer sentiment reached a seven-month high, indicating strong spending, though the data does not reflect reactions to the election. 1Y trend: "Side"

Commodities

• Oil prices fell, as concerns over Hurricane Rafael eased and China's stimulus measures disappointed. While some support came from potential US sanctions on Iran and Venezuela, overall sentiment was bearish due to weak Chinese demand and deflationary pressures. 1Y trend: "Side"
• Gold prices held steady near $2,700 after the Fed's 25bps rate cut. The Fed acknowledged easing labor market conditions and progress on inflation but remained cautious. Chair Powell refrained from giving specific future rate guidance. The recent presidential election results are not expected to significantly impact the Fed's short-term policy stance. 1Y trend: "Up"

On Week 46, investors will focus on key economic indicators this week. Inflation, retail sales, and Fed officials' speeches will be closely watched. China's economic data, including loans, investment, and retail sales, will be crucial. Europe will see UK unemployment and GDP figures, German sentiment, and Eurozone inflation data. Other key events include Japan's GDP, Russia's inflation, Mexico's rate decision, and India's inflation data.

SVET Markets Weekly Update (October 28 - November 1, 2024)

On Week 44, stocks closed lower as traders were cautious ahead of the elections and the Fed decision. Job openings fell to a 28-month low, and manufacturing indicators showed a sharp contraction in business activity. The dollar index surged, hovering near a three-month high. Gold prices rose, fueled by expectations of a potential Fed rate cut and economic uncertainty. Europe's unemployment rate is at a historical low, with production continuing to slide and inflation picking up. BTC corrected sharply to just below $70K as some traders locked in profits ahead of the elections. ETH remained largely unchanged above $2.6K amid a lack of investor interest.

On Monday, stocks closed higher while investors await job openings and labor turnover data. Apple, Amazon, Meta, Microsoft, and Alphabet are set to report earnings. Gold is up due to geopolitical factors. Japan's unemployment rate dropped to a two-year low. BTC surged above $70K, driven by strong inflows into BTC ETFs and expectations of a Trump victory. ETH, still at $2.6K, is drastically underperforming.

Details

• Texas manufacturing improved in October, with production, capacity utilization, and shipments rising. However, new orders weakened, and labor market conditions softened. Price and wage pressures persisted. 1Y trend: "Up" (DFed)

Crypto

• Microsoft shareholders will vote on December 10th to consider adding BTC to their investments. Despite the proposal, Microsoft's board recommends voting against it. This comes as major shareholders like Blackrock embrace crypto, while Vanguard remains cautious. (source)

World Markets

• Japan's unemployment rate dropped to a 20-month low of 2.4% in September. Joblessness decreased, while the labor force participation rate increased. However, the number of employed individuals also declined. The jobs-to-applications ratio slightly improved to 1.24. 1Y trend: "Down" (JP)
• Spain's retail sales surged 4.1% YoY in September, driven by strong growth in non-food products. This marks the highest increase since March 2023. Monthly sales also rose 1%, the biggest gain in nearly a year. However, e-commerce sales declined 8.2%. 1Y trend: "Side" (ES)

Currencies

• The dollar index surged, hovering near a three-month high. Investors are awaiting key economic data releases this week, including GDP, PCE inflation, and payrolls. Market expectations for a 25bps Fed rate cut is above 90%. 1Y trend: "Side"

Commodities

• Gold prices surged above $2,750, fueled by expectations of a potential Fed rate cut and economic uncertainty. Lower interest rates typically boost gold's appeal as a non-interest-bearing asset. Meanwhile, China's gold demand has weakened this year. 1Y trend: "Up"

On Tuesday, stocks closed mixed as job openings fell and home prices increase slowed, with technology leading gains ahead of earnings and more economic data. The Nasdaq approached an ATH, while the Dow fell. Alphabet rose ahead of its earnings report, while McDonald's and Ford declined due to weaker results. Investors are watching for clues about the Fed's rate decision from upcoming economic data and tech earnings. German consumer confidence improved, and Brazil's digital asset imports surged by 40%. BTC and ETH are on the rise, with BTC leading the charge with a 4% gain, almost reaching its ATH. ETH is slowly following with an increase to $2.7K.

Details

• Job openings fell to a 28-month low of 7.443M in September. The decline was widespread across sectors and regions. While hires and separations remained stable, the cooling job market suggests a potential slowdown in economic activity. 1Y trend: "Down" (BLS)
• Texas' service sector improved in October, with a positive reading in the Dallas Fed's general business activity index. Revenues and hours worked increased, signaling a rebound in demand. However, input costs, including wages and benefits, continued to rise. Firms expect future growth but also increased uncertainty. 1Y trend: "Up" (Fdal)
• Retail inventories grew modestly in September, while wholesale inventories declined. Retail inventories excluding autos increased 0.1% MoM and 0.6% YoY. Wholesale inventories fell 0.1% MoM, with durable goods declining and non-durable goods increasing. 1Y trend: "Up" (both retail and wholesale) (Census)
• Home prices increased 5.2% YoY in August, the slowest pace in 10 months. While some cities like New York and Las Vegas saw strong growth, others like Denver and Portland experienced slower growth. Rising mortgage rates and seasonal factors contributed to the slowdown. 1Y trend: "Up" (source)
• The trade deficit widened significantly in September to $108.2B, the highest level since March 2022. This was due to a surge in imports, particularly consumer, capital, and industrial goods, while exports declined. 1Y trend: "Down, Deficit Increasing" Census

Crypto

• Brazil's digital asset imports surged 40% in September 2024, reaching $1.4B. Exports remained stable at $44 million. This resulted in a net inflow of $1.385B. Cryptocurrencies and stablecoins accounted for 70% of all trades. Year-to-date, Brazil's crypto imports totaled $13.7 billion, a 60% increase compared to the same period in 2023. (source)

World Markets

• German consumer confidence improved for the second consecutive month in November, reaching its highest level since April 2022. Income expectations and the propensity to buy increased, while economic outlook remained pessimistic. However, uncertainties related to crises, wars, and high prices continue to dampen consumer sentiment. 1Y trend: "Up" (GFK)

On Wednesday, stocks closed lower as investors digested mixed corporate earnings and economic data. Tech stocks were uncertain, with Nvidia and AMD declining, while Alphabet rose. Slower GDP growth and a strong labor market tempered hopes for Fed rate cuts. Investors are awaiting earnings from Meta, Microsoft, Apple, and Amazon. In the EU, inflation is accelerating as economic growth continues to slow down, exacerbating stagflationary expectations. BTC has corrected slightly but is still holding above $72K, while ETH sits at $2.6K.

Details

• Personal consumption expenditure increased 1.5% in Q3 2024, the slowest pace since Q2 2020. This was lower than expected, indicating a slowdown in consumer spending. 1Y trend: "Down" (BEA)
• GDP grew 2.8% in Q3 2024, slower than Q2. Consumer spending increased, driven by goods and services. Government spending and net trade also contributed positively. However, inventory investment and fixed investment slowed. 1Y trend: "Side" (BEA)
• Private sector added 233K jobs in October, far exceeding expectations. Service sector led job growth, while manufacturing shed jobs. Annual wage growth for job-stayers and job-changers continued to slow. 1Y trend: "Side" ADP
• 30-year fixed mortgage rates rose to 6.73% in the week ending October 25, the highest level in three months. This increase reflects investor expectations of a slower pace of Fed rate cuts. Jumbo mortgage rates also rose, while FHA mortgage rates declined slightly. 1Y trend: "Side" (MBA)

Crypto

• A recent poll by Paradigm suggests that 5% of voters are single-issue crypto voters, potentially influencing close elections. This group includes a significant portion of young, male, African American, and Hispanic voters. (source)

World Markets

• The Eurozone economy grew 0.9% YoY in Q3 2024, exceeding expectations and marking the strongest growth in three quarters. 1Y trend: "Down" (ES)
• Eurozone economic sentiment weakened in October 2024, as industrial confidence declined due to falling production and order books. Consumer inflation expectations rose, potentially hindering the ECB's efforts to curb inflation. However, the services sector showed strength. 1Y trend: "Side" (EU)

On Thursday, stocks closed sharply lower, led by tech stocks. Disappointing earnings from Microsoft and Meta, coupled with concerns about AI costs, pressured the market. A strong labor market and rising inflation also dampened hopes for Fed rate cuts. Europe's unemployment rate is at a historical low, with production still sliding down and inflation picking up. BTC tumbled below $70K on profit-taking before the elections, while ETH is frozen within its $2.4K-$2.6K range due to a lack of trader attention. Other crypto news: 'Crypto's not going anywhere,' says Florida CFO.

Details

• In September core PCE inflation rose 0.3% MoM, the highest in five months, and decreased 2.1% YoY, the lowest level since 2021. This decline reflects moderating price pressures in the US economy. YoY core PCE inflation remained at 2.7%. 1Y trend: "Down" (BEA)
• Job cuts in October totaled 55,597, up from the previous month but lower than the same period last year. Aerospace and defense led the cuts, followed by retail and consumer products. Year-to-date job cuts reached 664,839, the highest since 2020. Companies are adopting a cautious approach due to economic uncertainty and potential regulatory changes. 1Y trend: "Up" (CH)
• The Chicago PMI fell to 41.6 in October 2024, indicating a sharp contraction in business activity. Production, new orders, and employment all declined. Price pressures eased slightly. 1Y trend: "Side" (ISM)

Crypto

• Florida has invested nearly $800M in cryptocurrencies, according to its CFO Jimmy Patronis. He believes crypto is here to stay and Florida aims to capitalize on this opportunity. (source)

World Markets

• Eurozone annual inflation accelerated to 2% in October, reaching the ECB's target. This was mainly due to base effects and higher food and energy prices. Core inflation remained steady at 2.7%. Monthly inflation rose 0.3% in October. 1Y trend: "Down" (ES)
• Eurozone unemployment rate remained steady at 6.3% in September, the lowest level on record. 1Y trend: "Down" (ES)
• German retail sales surged 3.8% YoY in September, exceeding expectations. This is the strongest growth in recent years, driven by increased consumer spending. 1Y trend: "Up" (DE)
• French annual inflation rose to 1.2% in October, driven by higher food and energy prices. Monthly inflation rebounded 0.2% due to increases in fuel, clothing, and food prices. EU-harmonized inflation also increased to 1.5%. 1Y trend: "Up INSEE
• The National Bank of Ukraine held its key interest rate at 13% in October 2024. Inflation remains elevated (8.6%), driven by food prices and currency depreciation. The NBU expects inflation to peak in late 2024 and decline in 2025. GDP growth is forecast to be 4% in 2024, supported by international financing. 1Y trend: "Down" (UA)

Currencies

• The dollar fell slightly but is set to close October with a strongest monthly rise in over two years. Recent data, including GDP growth, PCE inflation, and strong labor market figures, has tempered expectations for aggressive Fed rate cuts. The market is now pricing in a 25 bps cut next week, with a higher probability of another cut in December. A potential Donald Trump win in the upcoming election could also weigh on the dollar. 1Y trend: "Side
• The British pound fell to a three-month low of $1.285 after the Labour government's budget announcement. The budget includes increased borrowing, higher taxes, and a revised economic outlook. While the Bank of England is still expected to cut rates next week, market expectations for further cuts have been reduced. 1Y trend: "Up, Appreciating

On Friday, stocks closed higher, with Amazon and Intel leading the gains after strong earnings. A weak jobs report, the upcoming Fed meeting, and the election added uncertainty. Oil prices increased again due to tensions in the Middle East, while China's manufacturing prospects improved on stimulus measures. BTC and ETH remained unchanged, sitting just below $70K and above $2.6K, respectively, after a sharp correction over the previous two days as some traders locked in profits ahead of the elections.

Details

• Unemployment rate remained steady at 4.1%. While the labor force participation rate declined slightly, the number of unemployed persons and job losers remained relatively unchanged. 1Y trend: "Down" (BLS)
• Job growth slowed significantly in October, adding only 12K jobs. The decline was primarily due to a Boeing strike and hurricane disruptions. Employment in healthcare and government increased, while manufacturing and temporary help services declined. 1Y trend: "Up"" (BLS)
• The ISM Manufacturing PMI fell to 46.5 in October, indicating a continued contraction in the sector. Production, new orders, and inventories declined. Price pressures increased, while employment and supplier deliveries showed slight improvement. 1Y trend: "Side"" (ISM)

Crypto

• Crypto industry layoffs continue. Consensys (20%), Kraken (15%), dYdX (35%), and Nova Labs (36%) have recently reduced their workforces due to market conditions and strategic shifts. (source)
• Following a CNN/SRSS poll on Oct. 31, Harris saw her odds improve in two battleground states, with a 5% increase in Wisconsin and 6% in Michigan. Her overall chances of winning the election rose from 2.3% to 39.6%, while Trump holds a 60.3% lead overall. Trump leads Harris by 22.2% across six key states, including a 14% advantage in Pennsylvania. A Galaxy Research report shows Trump ahead in 18 venues, though he has lost his lead in 13 of them. (sourrce)

World Markets

• Brazil's manufacturing PMI eased to 52.9 in October, but still indicated solid growth. Output and new orders increased, driven by international demand. Job creation remained strong, and price pressures eased. Businesses expressed increased optimism about future prospects. 1Y trend: "Up" (SP)
• Argentina's central bank slashed its interest rate by 500 basis points to 35%, reflecting progress in curbing inflation. President Milei's fiscal policies have helped reduce inflation from over 25% monthly to around 3.5% in recent months. However, these policies have also led to economic slowdown and increased poverty (above 50%). 1Y trend: "Up" (AR)
• China's Caixin Manufacturing PMI rose to 50.3 in October, as a result of a series of stimulus measures from Beijing in late September, indicating expansion in factory activity. Output and new orders increased, while export orders declined at a slower pace. Employment fell, and input costs rose, leading to higher selling prices. Overall sentiment improved, but challenges remain. 1Y trend: "Down" (SP)
• Russia's manufacturing PMI rose to 50.6 in October, signaling expansion. Output and new orders improved, with export orders rising significantly. However, employment remained weak, and input and output costs increased. Businesses expressed optimism about future investment. 1Y trend: "Down" (SP)

Commodities

• Oil prices rose, driven by tensions between Iran and Israel. Market participants are concerned about potential escalation and its impact on oil supplies. OPEC+ may delay production cuts due to weak demand and rising supply. However, overall sentiment remains cautious due to geopolitical risks and economic uncertainties. 1Y trend: "Side"

On Week 45, the upcoming presidential elections on Tuesday will be closely monitored by global investors, alongside the Fed's interest rate decision and various economic indicators like the ISM Services PMI and consumer sentiment. Earnings reports from large and mid-cap companies will also be significant. Additionally, interest rate decisions from several countries, along with Germany’s industrial data and European PMIs, will offer insights into the European economy. In China, key events include the National People's Congress and important trade and inflation metrics.

Comment: What's Up With Future?

As the current global economic and political landscape evolves, the contours of the future world order are becoming increasingly apparent.

In the next two to three decades, after an initial period of economic and political readjustment marked by instability and conflict, the world will likely bifurcate based on inherent limitations and historical trajectories. One part will maintain its technological and social advantage, fueled by open, highly competitive markets built on cutting-edge advancements. However, this region will face growing social pressures due to aging populations, decreased immigration, and increased government intervention, leading to tighter regulations and higher taxes. The rise of inequality, exacerbated by a rise of AI, market restrictions and reduced entrepreneurial opportunities, will further complicate the situation.

The other part of the world will stabilize within a more patriarchal, heavily regulated framework, reliant on government initiatives and investments. While unlikely to match the first world in high-tech innovation, this region may experience rapid economic growth due to its lower starting point and untapped potential for regional cooperation, bolstered by significant government support. However, it will remain dependent on the first world for high-tech goods and services. This region will also exhibit significant social disparity, with more pronounced extremes. Despite these challenges, it may offer better profitability and growth opportunities for businesses, albeit constrained by bureaucratic hurdles and high transaction costs.

A third category of countries will emerge, aiming to position themselves as intermediaries between the first and second worlds. These countries will export food, natural resources to one side, and high-tech goods to the other one, serving as conduits between the two.

Finally, a fourth category of micro-economies will strive for complete independence. By leveraging geographical or technological advantages, these economies will cater to wealthy individuals, offering unique, exclusive products and services that are inaccessible in the larger world. Freedom, both political and economic, may become a rare commodity in this scenario, as it is increasingly curtailed by governments in all three major economic models.

In this context, decentralization and cryptocurrencies will play a crucial role, attracting talent and facilitating borderless trade, offering a potential escape from the constraints imposed by traditional economic systems of the 1st, 2nd and 3rd Worlds.

SVET Markets Weekly Update (October 21 - 25, 2024)

Equities closed mixed, with the Nasdaq finishing slightly in the green while the SP and Dow both declined. This divergence can be attributed to the mixed macroeconomic landscape. Manufacturing continues to decline, albeit at a slower pace, as indicated by the less pessimistic readings from the Richmond Manufacturing Index. While building permits have fallen, the consumer sentiment index has risen. Additionally, the dollar index decreased after reaching three-month highs.

On a global scale, the economic picture mirrors this mixed sentiment, with a continued slowdown but at a more measured pace. The IMF has revised its global growth forecast for 2025 down to 3.2%. However, consumer confidence in the Euro Area has increased. The Japanese yen has weakened slightly, approaching a critical level that could prompt intervention from the BoJ again. Meanwhile, the Mexican peso has continued to decline amid intensifying concerns over the automotive sector, exacerbated by Trump’s threats of steep tariffs on Mexican cars. In China, the offshore yuan has stabilized, reflecting subdued market reactions to the PBoC’s recent monetary easing measures, while foreign direct investment has shown a slight improvement.

In the cryptocurrency market, BTC is making attempts to reach its ATH, driven by a surge in demand for spot BTC ETFs, which has reached its highest level since the halving in April, coinciding with Trump's favorable polling. ETH remains stuck in the $2.4K to $2.6K range, facing a lack of investor interest.

On Monday, stocks declined after their longest weekly rally of the year, as investors prepared for a busy earnings week, while Treasury yields rose, impacting consumer and homebuilder shares. Major earnings reports are anticipated from Tesla, Coca-Cola, and GE Aerospace, with 79% of companies exceeding expectations so far. Gold reached a new ATH as the yuan stabilized after monthly devaluation due to the CCP's stimulus package, despite the PBOC's recent monetary easing. BTC retreated sharply after yet another attempt to reach an ATH. It appears there is a significant sell wall built at the psychologically important level of $70K, which some major players are defending in order to accumulate as much BTC as they can before a historic breach attracts new buyers. ETH remains stuck at $2.6K, with low interest from investors.

Crypto

• Most crypto users get their blockchain information from social media, with Twitter leading at 41.7%. Telegram follows with 21.5%, and YouTube with 20.8%. Crypto news websites lag behind at 5%. Telegram has 950 million users, with 58% aged 25-44 and 53.2% male. With the rise of TON blockchain and in-app transactions, Telegram has grown as a home for crypto enthusiasts. TON Blockchain supports 7,734,371 transactions daily on average. (source)

Currencies

• The Japanese yen dropped below 149.5 per dollar, approaching the critical 150 level that could trigger intervention by authorities. Last week, it reached an 11-week low of 150.32 as the dollar strengthened due to positive economic data. Japan's inflation rates also slowed to five-month lows of 2.5% and 2.4%. The nation's top currency diplomat warned against excessive volatility, and markets are closely monitoring the 150 threshold for potential intervention. 1Y trend: "Down, Appreciating "
• The Mexican peso fell to 20 per USD, its lowest in six weeks, due to both domestic and external pressures prompting calls for looser borrowing. Concerns over the automotive sector intensified due to Trump's threats of steep (3x) tariffs on Mexican cars. An IMF report projected a 1.5% growth this year, while the Bank of Mexico indicated a potential rate cut. Rising US rate expectations have also reduced interest in emerging markets amid limited Chinese stimulus efforts. 1Y trend: "Up, Depreciating "
• The offshore yuan stabilized at 7.13 per dollar amid subdued market reactions to the PBC's recent monetary easing, which lowered interest rates to record lows. The one-year and five-year LPRs were both cut by 25 basis points. This followed hints from PBOC Governor Pan Gongsheng about potential further reductions. Despite a slight GDP growth of 4.6% in Q3 and a drop in the unemployment rate to 5.1%, new home prices fell for the 15th month, decreasing 5.7% year-on-year. 1Y trend: "Side"

Commodities

• Gold prices surged to new ATH (~$2,730) due to rising demand for safe-haven assets amid escalating Middle East tensions, along with upcoming presidential elections. Additionally, looser monetary policies from major central banks, including rate cuts by the PBoC and ECB, support gold, although strong economic data hints at a potentially less dovish Fed. 1Y trend: "Up"

On Tuesday, equities finished mostly flat, with the SP and Dow slightly down, while the Nasdaq rose. Concerns over interest rates and mixed earnings results persisted. Treasury yields reached a high of 4.22% before easing, reflecting traders' reassessment of the Fed's future actions. Key stock movements included General Motors rising, while Verizon and Lockheed Martin fell. Investors are monitoring upcoming earnings from Tesla, Coca-Cola, and Honeywell. The IMF reduced its global growth forecast to 3.2%. BTC continued to correct, reaching 67K, while ETH remained at 2.6K.

Details

• The Richmond Fed Manufacturing Index was -14, showing less pessimism than September's -21 but marking a year of negative activity. New orders declined at a slower rate (-17 vs -23), while shipments fell (-8 vs -18) and backlogs decreased (-14 vs -16). Capital expenditures and employment continued to drop, though wages increased slightly (16 vs 15). Input costs slowed down (2.7 vs 3.4), but output prices rose more sharply (1.7 vs 1.6). 1Y trend: "Down" (Rich)

World Markets

• The International Monetary Fund reduced its 2025 global growth forecast to 3.2%, down 0.1 percentage points from July, while keeping this year's estimate steady at 3.2%. The IMF cited rising risks from conflicts and trade protectionism but commended central banks for managing inflation. US GDP is now projected to grow 2.8% in 2024, up from 2.6%. The Euro Area's growth forecast fell to 0.8%, while China's and Japan's forecasts were also lowered. The UK’s GDP estimate increased to 1.1%, and India's remains at 7%. 1Y trend: "Side"

Commodities

• Newcastle coal futures are currently at $145 per tonne, down from a one-year high of $153 on October 7th, as strong domestic supply and alternative energy sources temporarily reduced demand for thermal coal. China's coal output rose 4.4% in September, supported by increased production capacity after safety inspections ended. Despite economic concerns, thermal power generation in China increased nearly 10% YoY, with imports hitting a record 47.6 million tonnes, keeping futures 27% above March's low. 1Y trend: "Up"

On Wednesday, equities declined, with the Dow and S&P falling about one percent, and the Nasdaq decreasing by about two percent. Rising Treasury yields affected stocks as the Q3 earnings season progressed and cautious outlook from Fed officials. Consumer confidence in the EU rose. Japan's manufacturing decreased for four consecutive months. BTC rebounded marginally after three red days, while ETH continued to oscillate in a narrow range between 2.5K and 2.7K, averaging 2.6K for about three months.

Details

• Existing home sales fell 1% to an annualized rate of 3.84 million, the lowest since October 2010, and below forecasts. Sales decreased in the Northeast, Midwest, and South, while the West saw a 4.1% rise. The median home price dropped to $404,500 from $414,200. 1Y trend: "Down" (NAR)
• The average interest rate for 30-year fixed-rate mortgages with conforming loan balances in the US held steady at 6.52%, near two-month highs. After hitting a two-year low of 6.13% in September, mortgage rates have increased recently due to rising Treasury yields. 1Y trend: "Down" (MBA)

World Markets

• Consumer confidence in the Euro Area rose by 0.4 points to -12.5 in October 2024, the highest level since February 2022, but still below the long-term average. 1Y trend: "Up" (EU)
• The au Jibun Bank Japan Manufacturing PMI dropped to 49.0 in October 2024, down from 49.7 in September and below the forecast of 49.9. This marks four consecutive months of contraction and the strongest decline since March. Output and new orders also shrank significantly, with exports experiencing faster declines. Employment fell for the first time since February, and purchasing decreased for the first time in three months. Business sentiment hit a 2.5-year low, with mixed signs on inflation. 1Y trend: "Up"
• The Bank of Canada reduced its key interest rate by 50 basis points to 3.75% in October 2024, signaling more cuts if the economy follows expected trends. This move follows three previous 25 basis point reductions, responding to a significant slowdown in inflation, which fell to 1.6% in September, below the 2% target. The bank noted a slowdown in consumption and a rise in the unemployment rate above 6.5%. It anticipates GDP growth of 1.2% this year and 2.1% next year. 1Y trend: "Down"

Commodities

• Aluminum futures climbed to $2,660 per tonne, nearing the four-month high of $2,685 from October 2nd, despite declines in other base metals. Steady demand and rising supply concerns, particularly from China’s slowing factory output, helped stabilize aluminum prices, which are vital for electric vehicles and solar panels. Aluminum stocks at Chinese ports fell by 20% since March. Meanwhile, bauxite prices surged as Guinea ceased exports, further tightening supply for Chinese smelters amid decreased output from Australia and Jamaica. 1Y trend: "Up"

On Thursday, equities finished mixed, with technology stocks outperforming and leading to gains in the Nasdaq. Tesla surged more than 20%, adding over $100B in market value following strong profits. Other notable stock movements included declines in IBM, Honeywell, and Boeing. The dollar decreased, while the Indian rupee remained close to record lows due to increased foreign exchange outflows from Indian markets. BTC held steady near 68K, while ETH remained roughly unchanged at 2.5-2.6K.

Details

• The Chicago Fed National Activity Index fell to -0.28 in September, down from -0.01 in August. Production indicators contributed -0.21, while sales, orders, and inventories remained at -0.03. Employment indicators dropped to -0.03 from neutral. The personal consumption and housing category improved slightly to -0.01 from -0.03. The three-month moving average also decreased to -0.19 from -0.14. 1Y trend: "Side" (CFed)
• Unemployment claims decreased to 227K for the week ending October 19th, marking the lowest level this month and falling short of expectations of 242K. This decline suggests resilience in the labor market amid rising interest rates, reinforcing the likelihood that the Fed will avoid aggressive rate cuts. 1Y trend: "Up" DoL
• The Composite PMI increased to 54.3 in October, up from 54.0 in September, indicating growth in business activity at the quarter's start. The service sector led this growth (PMI at 55.3), while manufacturing continued to decline (PMI at 47.8). Employment dipped slightly amidst pre-election uncertainty, though business confidence improved, anticipating post-election stability. 1Y trend: "Up" (SP)
• In October, the Kansas Fed Composite Index was -4, an improvement from -8 in September and close to -3 in August. This index averages production, new orders, employment, supplier delivery times, and raw materials inventory. The decline affected both durable and nondurable goods, especially in chemical, steel, and beverage manufacturing. 1Y trend: "Down" (KFed)
• In September, building permits dropped 3.1% to a seasonally adjusted annual rate of 1.425M, revised from an initial estimate of 1.428 million. Permits for buildings with five or more units fell 9.2% to 405 thousand, while single-family authorizations decreased by 0.4% to 963 thousand. The Northeast, Midwest, and South experienced declines in permits, while the West saw an increase of 8.9% to 331 thousand. 1Y trend: "Down" (Census)

Currencies

• The dollar index decreased to 104.2, after rising nearly 1% to three-month highs over the previous three sessions. Investors are focused on interest rates and anticipate the Fed won’t reduce rates as much as previously thought, due to strong economic data and election uncertainties. Initial jobless claims dropped, returning to pre-hurricane levels. The probability of a 50bps rate cut this year decreased to approximately 68%. The dollar weakened against the British pound and Japanese yen. 1Y trend: "Side"
• The Indian rupee has remained below 84 since mid-October, close to record lows, amid rising foreign exchange outflows from Indian markets. Concerns about sustaining economic growth prompted investors to reduce their positions in Indian equities and bonds, leading to significant net outflows recently. Additionally, investors shifted focus to Chinese markets after new stimulus measures and expectations for RBI easing declined due to September's consumer inflation surpassing 5.5%, exceeding the RBI’s 4% target. 1Y trend: "Up, Depreciating"

On Friday, stocks closed in the red after the Nasdaq reached an ATH but then retreated, even as Michigan consumer sentiment hit its highest level in six months. Declines in banks overshadowed gains in technology, with Microsoft and Apple rising 1-2% ahead of earnings. For the week, the S&P and Dow fell, while the Nasdaq gained slightly. EU inflation expectations decreased. China's FDI improved marginally but is still down 30% YoY. BTC (67K) and ETH (2.5K) finished slightly in the red, remaining volatile within narrow ranges.

Details

• In October, the University of Michigan's consumer sentiment index rose to 70.5, up from a preliminary 68.9, marking the highest level in six months. Both economic conditions and expectations improved, driven by better buying conditions for durable goods due to lower interest rates. Concerns about the upcoming election affected consumer views, with those anticipating a Harris presidency dropping from 63% to 57%. Inflation expectations remained steady at 2.7%, while five-year expectations fell to 3%. 1Y trend: "Up"(Umich)
• In September, new orders for manufactured durable goods fell by $2.2B (0.8%) to $284.8B, following a similar decline in August. The drop was mainly due to a $3.1B (3.1%) decrease in transportation equipment. Orders for machinery, computers, and capital goods also declined. However, excluding transportation, new orders rose by 0.4%, while non-defense capital goods orders excluding aircraft increased by 0.5%, exceeding market expectations. 1Y trend: "Side" (Census)

Crypto

• Demand for spot BTC ETFs has surged to its highest level since the BTC halving in April, while interest in futures trading appears to be declining. According to a Glassnode report, daily trading volumes for futures contracts are about $35B, significantly lower than the $80B seen after BTC hit its ATH of $73,679 in March, indicating a lack of significant activity among futures traders. (source)

World Markets

• In September, median inflation expectations in the Euro Area fell to 2.4%, marking a new low since September 2021, down from 2.7% in August. Three-year inflation expectations also declined to 2.1%, the lowest since February 2022. Income growth expectations rose to 1.3%, while nominal spending growth remained steady at 3.2%. Economic growth projections stayed at -0.9%, but the expected unemployment rate increased slightly to 10.6%. 1Y trend: "Down" (EU)
• Foreign direct investment (FDI) in China fell by 30.4% to CNY 640.6B in the first three quarters of 2024, showing a slight improvement from the 31.5% decline recorded in the first eight months. 1Y trend: "Down" (CN)
• In October, Germany's Ifo Business Climate indicator rose to 86.5, its first increase in five months, surpassing expectations. The current conditions sub-index improved to 85.7, while business expectations climbed to 87.3. Despite brighter expectations, skepticism remains as the economy shows signs of stability. In manufacturing, optimism increased, although the current situation is still viewed negatively, with order shortages persisting. Conversely, the service sector saw improvement, particularly in logistics, tourism, and IT. 1Y trend: "Down" (Ifo)
• In September, France's Initial Jobless Claims rose to 42.20K, up from -12.70K in August 2024. Historically, claims have averaged -0.80K from 1996 to 2024, peaking at 807.30K in April 2020 and hitting a low of -190.50K in June 2020.
• Spain's Q3 unemployment rate dropped to 11.21%, the lowest since Q2 2008, aligning with market expectations. Unemployment fell by 1,200 to 2.754M, while employment rose by 138,300 to 21.823M. 1Y trend: "Down" (INE)
• The Bank of Russia unexpectedly raised its key interest rate by 200bps to 21%, exceeding the anticipated 100bps increase. This is the highest rate on record, surpassing the 20% hike following the 2022 ruble crash. The central bank highlighted persistent inflation driven by strong domestic demand, limited economic capacity due to Western sanctions, and a labor shortage. Deteriorating trade conditions and an expansive 2024 Federal Budget further exacerbated inflation expectations. 1Y trend: "Up" (CBR)

Week 44, will be eventful as investors await Q3 GDP growth estimates, non-farm payroll data, the unemployment rate, and JOLTS job openings. Key reports will also include ISM Manufacturing PMI, consumer confidence, and PCE inflation. Major companies like Microsoft, Alphabet, and Apple will announce their Q3 earnings. In Europe, inflation and GDP data will be released by several countries, while Asia will see China's PMIs and Japan's interest rate decision.

Comment: What's Up With The World Markets?

Overall, markets appear to be entering a plateau, buoyed by slightly improved economic indicators but weighed down by uncertainties in geopolitics. The risks of entering a global stagflation scenario are increasing, as central banks worldwide exhibit weakness and hesitation in their easing policies, failing to act decisively to promote job creation and manufacturing growth.

Furthermore, the widening divide between the Global North and South—highlighted during the recent BRICS summit in Kazan—suggests that artificial political barriers, such as tariffs, are likely to further slow down the global economy in the near future. In this context, easing monetary policies by central banks have become a necessity; however, inertia and the outdated charters of these institutions hinder timely responses to the macroeconomic situation. Compounding this issue is the rapidly developing military sector, which will significantly increase government expenditures globally, inevitably leading to higher taxes that could suppress business productivity even more.

In addition, politically driven border closure policies between the North and South will likely exacerbate inflationary pressures, as industrial production from the North becomes more expensive for Southern economies, while energy and food costs rise for the North. Consequently, this could trigger inflation on both sides of the increasing divide. Rising inflation will, in turn, limit the ability of central banks to pursue active easing policies.

Taken together, these factors create an environment conducive to the onset of global stagflation.

SVET Markets Weekly Update (October 14 - 18, 2024)

On Week 42, equities achieved new ATHs driven by a tech rally and positive economic indicators, including a surprising rise in retail sales. The dollar index advanced on expectations of slower Fed rate cuts connected to robust job and inflation data. The ECB lowered interest rates by 25 basis points, while the Eurozone reported a 2.5% YoY drop in construction output. India's inflation climbed to 5.49%, exceeding targets, and the Brazilian real and Mexican peso weakened amid foreign exchange concerns and geopolitical tensions. Gold and silver prices soared to new highs, fueled by safe-haven demand amid election uncertainty. BTC is poised for new highs, contrasting with ETH’s underperformance.

On Monday, equities rose, with the Dow and S&P reaching new ATHs. The Nasdaq also gained. Tech, utilities, and real estate sectors led the gains, while energy declined. The dollar reached a 2-month high. China's exports hit a 5-month low as India's inflation jumped to its highest in 9 months. ETH outperformed BTC (66K), reaching 2.6K, fueled by enthusiasm following a narrowing in the presidential race.

Crypto

• Crypto investors are more bullish on BTC, pouring $419M into ETF funds previous week. This shift from negative flows is attributed to a perceived increase in the likelihood of a GOP-led White House. Investors are now prioritizing presidential politics over economic data. (source)

World Markets

• China's trade surplus widened to $81.71 billion in September, exceeding expectations but slowing from August. Exports grew, though at the slowest pace in five months. Imports fell due to weak domestic demand. The surplus with the US narrowed to $33.33 billion. For the first nine months, the overall surplus was $689.5 billion, with exports up 4.3% and imports up 2.2%. The surplus with the US was $257.87 billion. 1Y trend: "Down" (CN)
• China's banks extended $1.59 trillion in new loans in September, exceeding August but falling short of expectations. It was the lowest September loan total since 2018, raising concerns about Beijing's ability to stimulate the economy and achieve its 5% growth target. Total social financing met expectations, but outstanding loan growth slowed to 8.1% from 8.5% in August. 1Y trend: "Down" (source)
• India's inflation rose to 5.49% in September, exceeding expectations and the RBI's target of 4%. Food prices surged, contributing significantly to the increase. Housing costs rose, while fuel prices fell less sharply. The CPI rose 0.6% from August. 1Y trend: "Down" (IN)

Currencies

• The dollar index rose, nearing its highest levels in two months. Expectations for smaller Fed rate cuts increased after strong jobs and inflation data. While higher jobless claims and slowing producer inflation offered some counterargument, markets still see an 87% chance of a 25 basis point cut in November. Investors await retail sales, jobless claims, and Waller's remarks. 1Y trend: "Side"

Commodities

• Natural gas prices dropped to $2.48/MMBtu, extending a decline from a three-month high. Hurricane Milton reduced demand in Florida due to power outages, while mild weather curbed demand elsewhere. A smaller-than-expected storage injection offered some support, but robust supply and uncertainty about hurricane's impact kept prices low. Cooler weather forecasts in some regions provided short-term stabilization. 1Y trend: "Up"
• Sugar prices rose slightly, recovering from a three-week low. Concerns about low supply due to drought in Brazil and geopolitical tensions supported prices. Brazilian sugar output fell 16% in late September, and traders lowered production estimates for the year. The diversion of sugarcane for ethanol production also limited sugar supply. 1Y trend: "Down"

On Tuesday, equities fell, led by the energy, technology, and healthcare sectors. Megacap chip stocks like Nvidia, AMD, and Broadcom declined significantly. Apple rose due to strong demand for older models. New York manufacturing activity is sharply down. Oil prices are down, while gold prices are up. European investor sentiment improved as EU industrial output rebounded. BTC and ETH stumbled at 67K and 2.6K, but remain in a bullish trend.

Details

• The NY Empire State Manufacturing Index fell to -11.9 in October, surprising analysts. This is the worst reading since May, indicating a contraction in New York State. New orders, shipments, and inventories fell. Delivery times shortened, but supply availability worsened. Labor market conditions improved slightly. Input and selling price increases remained modest but rose. Future business activity rose to a multi-year high. 1Y trend: "Up" (NYF)

World Markets

• The ZEW Indicator for the Euro Area rose to 20.1 in October, exceeding expectations. This follows three months of decline and is the highest point since July. Improved sentiment is driven by stable inflation expectations, potential ECB rate cuts, and stronger economic forecasts. Analysts are mostly optimistic about the economy. The current economic situation indicator fell, and inflation expectations rose. 1Y trend: "Up" (Zew)
• Germany's ZEW Current Conditions Index fell to -86.9 in October, the lowest since May 2020. This indicates a rapidly worsening economic situation in Germany. 1Y trend: "Down" (Zew)
• South Korea's unemployment rate rose slightly to 2.5% in September from 2.4% in August but still stays on a decades lows as Korea is one of the major beneficiaries of rising geopolitical tensions over Taiwan and CCP policies. The number of unemployed people fell, while the number of employed people rose. The labor force participation rate remained unchanged. 1Y trend: "Down" (KR)
• The Brazilian real weakened to a one-month low of 5.65 per USD in October. Concerns about reduced foreign exchange inflows and a stronger US dollar contributed to the decline. Lack of details on Chinese stimulus dampened demand for Brazilian exports, impacting key industries. Soybean, corn, and iron ore prices fell, further weakening the real. Selling pressure was capped by stronger economic data, favoring a hawkish stance by the Brazilian central bank. 1Y trend: "Up, Weakening"

Commodities

• Gold prices rose slightly to $2,665 per ounce, supported by declining Treasury yields. Weaker New York manufacturing data increased the appeal of gold as a non-yielding asset. The dollar eased, but remained near recent highs. Markets expect a 25-basis-point Fed rate cut in November. Investors await retail sales, industrial production, and jobless claims data. Gold remains a safe haven, though easing Middle East tensions could limit its rise. 1Y trend: "Up"
• WTI crude oil futures fell 4.4% to $70.6 per barrel due to reduced supply disruption fears (about energy targets in Iran). The IEA cut demand forecasts, and Chinese oil demand declined. Crude production in the Americas is expected to rise. OPEC lowered its global oil demand forecast. 1Y trend: "Side"

On Wednesday, equities rose as utilities and financials outperformed, while communication services and consumer staples lagged. Gold reached a new ATH as the Mexican peso weakened following Trump's comments about re-shoring car production. BTC is edging towards 68K as the presidential race appears to be heading in a pro-crypto direction, while ETH is still stuck at 2.6K.

Details

• Export prices fell 0.7% in September, exceeding expectations. Non-agricultural export prices fell 0.9%, while agricultural export prices rose 0.6%. For Q3, export prices fell 1.1%, the most since December 2023. YoY, export prices fell 2.1%, the most since January. 1Y trend: "Up" (BLS)
• 30-year fixed-rate mortgage rates rose to 6.52% in the week ended October 11th, the highest in two months. This follows three straight increases after hotter-than-expected inflation reinforced expectations for slower Fed rate cuts. Jumbo mortgage rates rose to 6.76%, and FHA mortgage rates rose to 6.42%. 1Y trend: "Down" (MBA)

Crypto

• The a16z State of Crypto report reveals trends in the digital asset industry, noting a significant overlap between crypto and AI users. Thirty-four percent of crypto projects utilize AI, up from 27% last year. Monthly active addresses exceed 220 million, a 300% increase since September 2023. Solana leads with 100 million active addresses, while stablecoins show continuous growth despite declining trading volumes. The report also highlights crypto's influence on U.S. elections, with notable interest in battleground states like Pennsylvania and Wisconsin. (source)

World Markets

• India's merchandise trade deficit was $20.8B in September, the lowest since April and below expectations of $24.6B. Imports rose 1.6% to $55.4B, while exports grew 0.5% to $34.6B. (IN)
• The Bank of Indonesia maintained its interest rate at 6% during its October meeting to achieve an inflation target of 2.5% ± 1% while supporting economic growth. Mr. Warjiyo (BoI head) said it was influenced by rising global uncertainties. This decision followed a surprise 25 basis points cut in September, the first decrease since January 2021. The annual inflation rate fell to 1.84% in September, near a three-year low. Meanwhile, the Rupiah depreciated 2.82% as of October 15, 2024, and the central bank kept its economic growth forecast at 4.7-5.5% for the year. 1Y trend: "Up" (ID)

Currencies

• The Mexican peso weakened to 19.9 per USD in October, reaching a one-month low. Trump's threat of tariffs on Mexican cars raised concerns about disruptions to the automotive sector. The IMF forecast a slowing economy, projecting growth to decelerate to 1.5%. Bank of Mexico minutes highlighted the need for a less restrictive monetary policy, and economists estimate a 50 basis point rate cut for the rest of the year. 1Y trend: "Up"

Commodities

• Gold surged to $2,680 per ounce, reaching a record high as Treasury yields fell. The Fed is anticipated to implement rate cuts in its last two meetings this year, continuing into 2025 amid a slowing economy. 1Y trend: "Up"

Comment: What Does "Data Depended Fed" Mean?

Since Powell's anointment to the Fed throne, all we keep hearing from him is that he's 'data dependent.' Ask yourself: what does that mean? Were previous Fed heads also 'dependent' on data? What about Paul Volcker, who caused one of the deepest recessions—in fact, the stagflation—in our history?

It would be absurd to say that Volcker couldn't read statistics and not to see the dark abyss to which his stubbornness was leading businesses and consumers. Why wasn’t he reversing his detrimental policies then? Because he was not 'data dependent' and believed in the 'cause,' perhaps?

Isn’t that right? Those individuals upstairs now possess such unprecedented powers that it has led them to view the rest of us as lab rats. Some of those 'scientists' are megalomaniacs like Volcker, who insist on proving their outlandish 'economic theories' no matter what.

Of course, some are well-intentioned and genuinely seek 'universal good and prosperity,' or are, more likely, ordinary bureaucrats interested in their careers first and foremost. In that case, they try to navigate between opposing political forces pressuring them and label themselves 'data dependent.'

In fact, if they truly are, then they can only act in unison with a prevailing macro-trend by magnifying it—injecting more or less liquidity into the markets. In other words, being 'data dependent' means they are always late, by definition. So the question is, why do they exist at all if they can only exacerbate market volatility instead of preventing it?

If, by contrast, they see themselves as Volcker-like missionaries, it means they claim a divine power to know what the future holds and are able to direct us to or from it. This is preposterously foolish, and most bureaucrats who have taken Financial History 101 understand that.

No wonder, then, that we are now stuck with Powell—one of those learned bureaucrats who feeds us 'data dependent' fallacies in order to keep his job longer despite all good reasons.

On Thursday, equities ended mixed after the Dow and SP briefly reached new ATHs, with semiconductor shares leading the gains. Retail sales increased, and jobless claims were lower than expected, suggesting strong consumer spending. Traders are now focusing on the upcoming earnings reports from Big Tech. Gold reached a new ATH as the ECB cut its rate. BTC (at 68K) continued to slowly edge up on election optimism, while ETH remained stuck at 2.6K.

Details

• The NAHB/Wells Fargo Housing Market Index rose to 43 in October, exceeding expectations. Current sales conditions and sales expectations rose, supported by expectations of Fed rate cuts. Traffic of prospective buyers increased slightly. The share of builders cutting prices remained unchanged. 1Y trend: "Side" (Nahab)
• The Philadelphia Fed Manufacturing Index rose to 10.3 in October, exceeding expectations. Current general activity, new orders, and shipments grew. Employment remained stable. Price indexes decreased slightly but still show price increases. Future growth expectations improved, signaling optimism. 1Y trend: "Up" (Phil)
• Retail sales rose 0.4% in September, exceeding expectations. Sales at miscellaneous stores, clothing, health, food, and beverages increased. Sales at electronics, gasoline, and furniture stores declined. Excluding food, auto, building materials, and gasoline, sales rose 0.7%, the most in three months. 1Y trend: "Side" (Census)

Crypto

• Spot BTC ETFs have seen over $20B in net inflows, despite BTC's seven-month downtrend. BTC has struggled to surpass $68.3K since June and has declined since March. It took ten months for BTC ETFs to reach $20B, compared to five years for gold ETFs. BlackRock accounted for $22 billion in inflows, while Grayscale faced over $20 billion in outflows. (source)

World Markets

• The ECB lowered interest rates by 25 bp, as expected. This follows similar moves in September and June. The deposit facility rate is now 3.25%. Inflation is falling and is expected to decline toward the 2% target in 2025. Wage growth remains high but is easing. The ECB remains committed to restrictive rates to ensure inflation reaches its medium-term goal, using a data-driven approach. 1Y trend: "Side" (EU)
• Eurozone inflation fell to 1.7% in September, below the ECB target of 2%. Services inflation slowed, energy prices fell, and core inflation eased to 2.7%. Inflation eased in Germany, France, Italy, and Spain. 1Y trend: "Down" (EC)
• China's economy grew 4.6% in Q3, below expectations. This is the slowest growth since Q1 2023, due to property weakness, weak domestic demand, deflation risks, and trade frictions. 1Y trend: "Side" (CN)
• China's new home prices fell 5.7% year-on-year in September, the 15th consecutive decline. This is the steepest pace since May 2015, despite Beijing's efforts to address property weakness. Prices dropped in most cities, with Beijing, Guangzhou, Shenzhen, Tianjin, and Chongqing seeing steeper declines. Shanghai's prices rose. Monthly, new home prices dropped 0.7% for the fifth straight month. 1Y trend: "Down" (CN)

Currencies

• The dollar index rose to 11-week highs, supported by strong US economic data and a potential Trump victory. Retail sales rose more than expected, and jobless claims fell. The dollar gained from a weakening euro after the ECB cut rates. Investors await housing starts, building permits, and Fed commentary. 1Y trend: "Side"

Commodities

• Gold reached $2,690 on Thursday, a new ATH, as it maintained strong momentum despite increases in the dollar and Treasury yields. The European Central Bank cut rates by 25bps, signaling a solid disinflation process. Investors moved to safe-haven assets amid concerns over China's property crisis, affecting major Chinese capital markets. 1Y trend: "Up"

On Friday, equities rose, fueled by strong tech performance. This week, the S&P 500 is up 0.2% and the Dow is up 1%. Gold reached a new ATH, while silver is at its highest in 12 years. BTC touched $69K and is set to make a new ATH, at last, while ETH, still at $2.6K, is lagging far behind.

Details

• Building permits down (2.9%) in September, not fitting expectations. Regional decreases: Northeast (-13.1% to 126 thousand), the Midwest (-2.9% to 200 thousand), and the South (-6.1% to 765 thousand); Increases: the West (10.9% to 337 thousand). 1Y trend: "Down" (Census)

Crypto

• AI meme coins are becoming a new trend in cryptocurrency, sparking conversations about institutional investment. The integration of AI into these coins is viewed as a potential advantage, though skepticism remains about the viability of many mid-tier projects.

World Markets

• In August, Euro Area construction output fell 2.5% YoY. From 1996 to 2024, it averaged -0.2%, peaking at 44% in April 2021 and hitting a low of -31.1% in April 2020. 1Y trend: "Down" (EU)

Currencies

• The euro is up ($1.086) and set for its 3-rd weekly decline as markets expect more cuts from the ECB. The bank has lowered rates three times this year, citing improved inflation control and weaker economic conditions. Lagarde's comments led to expectations of a 25 basis point cut at each meeting until mid-2025, with a December cut fully anticipated. In contrast, strong economic data has lowered expectations for aggressive Fed cuts. 1Y trend: "Up (Depreciating)"

Commodities

• Silver prices rose to $33 per ounce, the highest in nearly 12 years, following gold's increase amid safe-haven demand due to US election uncertainty and Middle East tensions. Market forecasts favor Trump slightly against Harris. Positive data from China and the ECB's rate cut also influenced trading. 1Y trend: "Side"
• Gold surged past $2,710 per ounce, hitting a record high due to strong demand for safe-haven assets and recent interest rate cuts by central banks. Tensions in the Middle East and concerns over China's economy further boosted prices, though US economic data tempered gains. 1Y trend: "Side"
• WTI crude oil down 2% ($69.2) - the biggest since early September (-8%). This was due to lower demand, slowing China and signs of easing in the Middle East. 1Y trend: "Side"

On Week 43, the earnings season brings Tesla, Coca-Cola, 3M, General Motors, and Verizon releasing quarterly reports. Also, PMI data, durable goods orders, and home sales reports will be featured. Investors will also watch Germany's Ifo index and confidence figures for various countries, along with PMI data for Australia, Japan, India, France, Germany, and the UK. Canada will focus on the Bank of Canada's interest rate decision and retail sales. Additionally, South Korea will release its Q3 GDP growth rate.

SVET Markets Weekly Update (October 7 - 11, 2024)

On Week 41, stocks reached new highs as investors reacted to inflation data. Oil prices climbed due to Middle East tensions. The dollar strengthened, while the Euro weakened. Crypto followed stocks, with BTC rising but ETH remaining relatively stable.

On Monday, equities tumbled as investors now assign a 95% chance of a 25 basis point cut in November. Globally, crude oil climbed to a six-week high, while steel prices reached their highest level in three months, as the dollar remained elevated due to the rising threat of global conflicts. Meanwhile, BTC and ETH stayed unchanged from their post-drop levels of approximately $62K and $2.4K amid a lack of corporate investor interest driven by political uncertainty.

Details

• Consumer credit increased by $8.93B in August, following an upwardly revised $26.63B jump in the prior month, and below market expectations of a $12 billion rise. Consumer credit increased at a seasonally adjusted annual rate of 2.1 percent. 1Y trend: "Up" (Fed)

Crypto

• Elon Musk believes Polymarket could more accurately predict the presidential election than traditional polling. He recently gave a speech supporting Trump, who is leading Harris (51 to 48) in the polls according to Polymarket. (source)

World Markets

• Retail Sales in the Euro Area increased 0.80 percent in August MoM. 1Y trend: "Up" (EC)

Currencies

• The dollar index held around 102.5 after surging half a percent in the previous session following a stronger-than-expected jobs report (254K vs. 140K expected), while the unemployment rate fell to 4.1% from 4.2%. Markets now see around a 95% chance of a more modest 25 bps rate cut in November. 1Y trend: "Side"

Commodities

• WTI crude oil futures climbed to $77.1 per barrel, a six-week high, as tensions in the Middle East escalate. Investors are focused on whether Israel will respond to last week's Iranian missile attack. 1Y trend: "Side"
• Steel rebar futures surged 7% to CNY 3,420 per tonne in the last session of September, the highest in three months, amid an improved construction input outlook after key Chinese cities relaxed home-buying curbs. 1Y trend: "Side"

Comment: Macro&Crypto

In the long term, service-side inflation, which had initially cooled down until May and June—alongside commodity-side inflation that decreased due to adjustments in supply chains following post-enclosure and downward pressure from the Fed and other central banks—has begun to re-accelerate. This resurgence is largely attributed to high employment levels, driven in part by political factors and increasing societal pressure on both politicians and corporations.

Simultaneously, the markets, which consistently reached all-time highs over the past year, are now starting to decelerate. The media narrative has also shifted; it has transitioned from discussions of "stagnation, which we will avoid due to Fed easing" to more recent commentary asserting that "the Fed was too early to declare a victory parade." This indicates that we may be entering a period of stagflation, which is likely to last until major geopolitical conflicts are resolved (at least partially) and we re-enter the time of open (might be "semi-opened") and low-tariffs markets. However, as it looks at the moment, it may take decades for all these geopolitical issues to be sorted out.

Therefore, we are facing an extended period of slow transition toward a stagflation regime globally. During this time, the Fed and other financial regulators may be compelled to alternate between periods of quantitative easing and tightening. In an inflationary environment (stagflation = inflation + stagnation), where markets are flooded with liquidity, stock prices may rise, but this growth is expected to be highly volatile. Investors will find themselves caught between disappointing corporate earnings reports—due to shrinking market shares for most companies—and rising profits for a select few large corporations that leverage their scale to maintain higher rate of growth and lower prices.

As for cryptocurrency markets, they are also positioned for growth. Investors in developing countries may seek refuge from inflation, while corporate investors are likely to park excess cash in cryptocurrencies.

We still anticipate that the Nasdaq will decline to the range of 15,000 to 16,000 at some point over the next year, followed by a recovery fueled by government stimulus. Regarding BTC, a correction to $50K may accompany the Nasdaq's drop or be triggered by political factors, such as a DEM victory in the elections. However, inflationary pressures are likely to drive BTC prices up again, potentially reaching new highs within the next 2-3 years.

As for other cryptocurrencies, their pricing is heavily influenced by political factors, with 80-90% of their trading volume originating from the USA. The continuation of a DEM government could pose significant challenges for many local crypto companies.

We remain cautiously optimistic about ETH, expecting it to rise to $5K to $8K within the next 2-3 years, as well as SOL, which we believe could increase by 2-3 times during the same period. Aside from BTC, we suggest maintaining a portfolio allocation of 20% in SOL and ETH and 80% in cash over the next 4-6 months. This strategy will allow us to assess the political landscape before starting to accumulate assets again.

On Tuesday, equities are up; nine out of the 11 S&P sectors ended higher, led by technology, communication services, and consumer discretionary. Oil dropped on risks-overestimates, as rubber reached a 7-year high on China stimulus and uranium rose to its highest in a month on expected supply cuts. BTC and ETH lingered at week's old levels of $62K and $2.4K.

Details

• The NFIB Small Business Optimism Index increased to 91.5 in September from 91.2 in August, missing forecasts of 91.7. The Uncertainty Index rose 11 points to 103, the highest reading recorded. Fifty-one percent of owners reported capital outlays in the last six months, down five points from August. 1Y trend: "Up" (Nfib)
• The RealClearMarkets/TIPP Economic Optimism Index increased by 0.8 points to 46.9 in October 2024, the highest since April 2023. Sentiment has been on the rise for four consecutive months, though it remains entrenched in negative territory. The Personal Financial Outlook increased by 0.4 points to 53.6 this month. 1Y trend: "Up" (Tech)

Crypto

• Solana leads Q3 2024 in bridged net inflows. Ethereum retains market dominance but underperforms. Aptos challenges Solana with GameFi. (source)

World Markets

• The Reserve Bank of New Zealand lowered its official cash rate (OCR) by 50 basis points to 4.75% during its October 2024 policy meeting, marking the second consecutive rate cut and aligning with market expectations. New Zealand's annual inflation rate eased to 3.3% in Q2 2024, from 4% in the previous quarter and below market expectations of 3.5%. 1Y trend: "Up" (Rbnz)
• Industrial production in Argentina fell by 6.9% YoY in August, marking the fifteenth consecutive month of contraction. 1Y trend: "Down" (Indec)

Commodities

• WTI crude oil futures fell by 4.6% to $73.5 per barrel on Tuesday, as anticipated supply disruptions stemming from geopolitical risks in the Middle East have not yet materialized. 1Y trend: "Side"
• Uranium rose to $82 per pound in October, the highest in over a month, as risks to supply coincided with robust power demand for major nuclear energy producers. 1Y trend: "Up"
• Rubber futures traded around 210 cents per kg, holding close to a recent over 7-1/2-year high of 214 US cents per kg, on the back of China's massive stimulus measures. 1Y trend: "Up"

On Wednesday, stocks hit new records as investors react to Fed minutes and inflation data. Tech giants lead market higher, offsetting concerns over Alphabet's potential divestiture. Dollar index increased to 8-day high as traders predict smaller rate cut. BTC and ETH dropped briefly but returned to $63K and $2.4K.

Details

• Mortgage rates rise to 6.36%, highest since August, as Treasury yields increase, reflecting investor belief that the Fed won't lower interest rates as swiftly. Jumbo loan rates climb to 6.64% and FHA-backed mortgage rates rise to 6.22%. 1Y trend: "Down" (MBA)

World Markets

• The Reserve Bank of India (RBI) kept its benchmark policy repo rate at 6.5% for the tenth consecutive meeting in October 2024, aligning with market expectations but tweaked its policy stance to neutral, opening the door for rate cuts amid early signs of a growth slowdown in the economy. 1Y trend: "Side" (RBI)

Currencies

• Dollar index surges to 8-session high as traders predict smaller 25bps Fed rate cut. Policymakers divided on rate cut size, reinforcing Fed's view on economic outlook. Traders await CPI and PPI data. 1Y trend: "Side"

On Thursday, stocks ended mixed after a higher-than-expected core inflation report increased uncertainty over the Fed's rate decision. Fed remains divided on rate cuts as initial jobless claims reached a 14-month high. Oil and the dollar are in their second week of rallying amid worsening geopolitics. BTC dipped below $60K, while ETH continues to linger around $2.4K.

Details

• Unemployment claims rise to 258K, highest in 14 months, driven by Michigan and hurricane-affected states. 1Y trend: "Up" Annual inflation slows to 2.4% in September, lowest since February 2021, but above forecasts. Core inflation unexpectedly rises to 3.3%. Core inflation rate rises to 3.3% in September, beating expectations, driven by services and shelter costs. 1Y trend: "Up" (BLS) and (DOL)

Crypto

• Spot ETH ETFs have struggled to match the demand seen in spot bitcoin ETFs. Factors such as the absence of staking yield and the complex marketing of ETH hinder investor interest. While BTC ETFs garnered nearly $19B in inflows over ten months, ether ETFs, launched in July, have faced $556M in net outflows. Additionally, weak ETH price performance and unattractive valuations compared to other assets further dampen demand, making it challenging for these ETFs to capture investor enthusiasm. (source)

World Markets

• In September, Argentina's consumer prices rose by 3.5% MoM, the lowest since November 2021, after a 4.2% increase in August. This slowdown was seen in food, transportation, communication, education, health, and hospitality costs. However, prices for housing, utilities, clothing, and footwear increased. YoY, prices surged by 209%, marking the fifth month of disinflation and a decrease from 236.7% in August, aligning with market expectations. 1Y trend: "Down"

Currencies

• The dollar index remained around 102.9, poised for its second consecutive weekly gain as recent economic data and central bank cues influenced traders' expectations regarding Fed interest rate cuts. 1Y trend: "Side"

Commodities

• WTI crude oil futures hovered around $75.5 per barrel, set for a second weekly gain amid rising supply disruption risks. Israel’s security cabinet discussed possible responses to Iran's missile attack, raising market tensions over potential retaliatory actions against Iran's oil sector. Additionally, Hurricane Milton caused significant fuel shortages and power outages in Florida. Demand prospects improved as China announced a draft law to encourage private sector growth. 1Y trend: "Down"

On Friday, equities rallied, driven by strong bank earnings and a positive economic outlook. Meanwhile, producers' (PPI) inflation remained unchanged as consumer price index (CPI) rose, creating uncertainty about Fed rate cuts. The dollar reached a 2-month high as Indian industrial production declined for the first time since 2022. Crypto traders followed stocks, with BTC jumping to 64K but ETH remaining around 2.4K.

Details

• The University of Michigan consumer sentiment dropped to 68.9 in October, lower than expectations, with current conditions and expectations both weakening. Inflation expectations rose slightly for the year ahead but eased for the five-year outlook. 1Y trend: "Up" (SCA)
• Factory gate prices (PPI) held steady in September, below expectations, while service prices rose. Annual producer price inflation eased to 1.8%, with core inflation increasing to 2.8%, exceeding forecasts. 1Y trend: "Down" (BLS)

Crypto

• Liberland, a micronation seeking recognition between Croatia and Serbia, operates under a unique on-chain governance system. Newly appointed Prime Minister Justin Sun aims to establish it as the "freest nation," boosting interest and causing the Liberland Dollar to surge over 200%. (source)

World Markets

• India's industrial production fell by 0.1% YoY in August 2024, marking its first decline since October 2022, primarily due to a 4.3% drop in mining and a 3.7% reduction in electricity output. 1Y trend: "Side" (MOSPI)
• The Bank of Korea cut its base rate to 3.25%, the first time in nearly two years, due to easing inflation and weakening economic output. Inflation is projected below 2% this year, with GDP growth expected at 2.4% in 2024. 1Y trend: "Side" (BoK)

Currencies

• The Euro weakened to 2-month low (around $1.09), influenced by dollar strength and expectations of slow Fed rate cuts. The ECB is anticipated to lower rates further, while Eurozone inflation fell to 1.8%, the lowest since April 2021. 1Y trend: "Up"
• The dollar index approached 103, its highest in nearly two months, amid economic data suggesting persistent inflation. Producer prices stagnated, but core inflation exceeded expectations, prompting Atlanta Fed President Bostic to consider maintaining rates in November. 1Y trend: "Side"

Commodities

• Gold rose above $2,640 per ounce as traders reacted to mixed economic data, suggesting the Fed may slow rate cuts. Jobless claims raised concerns about the labor market, while producer inflation data is anticipated for further insights. 1Y trend: "Up"

On Week 42, focus will be on the retail sales report, Fed speeches, and earnings season. In Europe, the ECB's interest rate decision and Germany's ZEW Economic Sentiment index are key. The UK will release unemployment rate, inflation figures, and retail sales. China will reveal its Q3 GDP growth rate and other data. Inflation data will also be released for India, Canada, New Zealand, Japan, and South Africa.

SVET Markets Weekly Update (September 30 - October 4, 2024)

On Week 40, equities closed slightly in the green as concerns over the Fed's next rate easing were questioned by a strong jobs report; the unemployment rate fell to 4.1% in September, the lowest in three months. In the Eurozone, the Manufacturing PMI remained the lowest level this year.

Meanwhile, China's stock market experienced a remarkable +10% surge, with major indexes posting their largest gains in nearly two decades, driven by stimulus measures from Beijing. Precious metals also saw significant movements: gold prices reached new highs, on track for their biggest quarterly gain since 2016, while silver rose to $32.1 per ounce, the highest in 12 years. Oil prices jumped, and the dollar index strengthened following Iranian attacks on Israel.

In the crypto market, BTC and ETH began to correct slightly upward on technicals after experiencing a week-long crash.

On Monday, stocks ended higher after investors analyzed Powell's remarks. The S&P and Nasdaq reached record highs, while the Dow rose slightly. Powell noted that the Fed doesn't adhere to a fixed plan but mentioned the possibility of two quarter-point rate cuts this year. As traders await key economic data this week, including the jobs report, the likelihood of a 50 bps cut in November is currently at 35%. Internationally, Taiwan's manufacturing fell for the third month as demand for AI chips slowed, while Indian production contracted for the first time in three years. Gold is closing its best quarter of growth in eight years. China's stock market surged another 10%. BTC corrected sharply to 63K, dipping below the 200-day moving average, while ETH oscillates between 2.6K and 2.7K.

Details

• The Chicago PMI rose slightly in September but remained below the 50 mark, indicating continued economic contraction. Order backlogs and employment improved slightly, while supplier deliveries, new orders, and production declined. Prices paid remained high. 1Y trend: "Side" (ISM)
• The manufacturing sector in Texas showed signs of stabilization in September, with the general business activity index improving slightly from the previous month. While new orders and production continued to decline, employment rose, and raw material costs decreased. Overall, the outlook for US manufacturing remains muted. 1Y trend: "Side" (DFed)

Crypto

• The Ethereum Foundation has faced criticism for transferring 35K ETH to Kraken. The foundation clarified that these funds were for grants and salaries, not a sale. However, the community has demanded more transparency regarding the foundation's financial activities, including regular updates on spending, potential sales, and fund distribution. Meanwhile, independent researchers revealed the foundation holds $650M and spends about $100M annually.(source)

World Markets

• China's stock market saw a +10% surge, with major indexes posting their largest gains in almost two decades. This rally was fueled by Beijing's stimulus measures, including relaxed homebuying rules, lower mortgage rates, and reduced reserve requirements for banks.
• India's infrastructure output shrank 1.8% in August, reversing July's growth - first contraction since February 2021. Coal, electricity, cement, and refinery products all saw output declines. Steel and fertilizer production grew at a slower pace, while crude oil output continued to fall. 1Y trend: "Down" (EAGI)
• Germany's annual inflation rate fell to 1.6% in September, below forecasts. This is the lowest rate since February 2021. The decline was mainly due to lower energy costs. Core inflation also eased to 2.7%, the lowest since January 2022. 1Y trend: "Down" (Des)
• The Taiwan Manufacturing PMI fell to 50.8 in September from 51.5 in August, marking the third consecutive decline. Despite increased exports to Europe and North America, weaker output and new orders, along with a decline in future confidence, contributed to the slowdown. Job losses and falling input costs further impacted the manufacturing sector. 1Y trend: "Up" (PMI)
• Sri Lanka's inflation rate fell to -0.5% in September 2024, marking the first deflation since 1995. Prices declined for food, housing, and transportation, but rose for clothing and recreation. 1Y trend: "Down" (LK)
• Palestine's economy contracted by 32% YoY in Q2, marking three consecutive sharp drops. This resulted from an 86% decrease in output in the Gaza Strip due to Israel's invasion in October 2023. 1Y trend: "Down" (PCBS)

Currencies

• The Euro rose slightly to $1.12 as investors considered recent economic data and the ECB's monetary policy stance. Inflation rates in Germany and Italy fell below expectations, leading markets to anticipate a decline in the Euro Area's inflation rate to the ECB's target. ECB President Lagarde expressed confidence in achieving this target and hinted at a potential interest rate cut in October. The odds for another ECB interest rate cut in October are rising to about 75%. However, a weakening dollar due to the Federal Reserve's anticipated faster policy easing is putting pressure on the Euro. 1Y trend: "Up (Appreciating)"

Commodities

• Gold prices rose to a new high, on track for its biggest quarterly gain since 2016. The recent economic data suggests that inflation is moderating, making it more likely for the Fed to ease monetary policy.

Comment: What's Up With Markets

During the summer months, global markets experienced a significant shift away from post-pandemic growth, which had been driven by inflationary monetary policies and unprecedented stimulus packages. This momentum was further fueled in 2023 by speculative investments in eight AI-related technology stocks, and aided by easing inflationary pressures as the global economy adapted to new post-war logistics frameworks. Historically, the actions of central banks have proven counterproductive, exacerbating both inflation and the stagnation that is now beginning.

The first warning signs, noticed by economists six months ago, came in the form of slowing manufacturing data and rapidly declining inflation, signaling a sharp global slowdown in business activity. This trend was initially more pronounced in countries dependent on agricultural and manufacturing imports, and eventually became evident in developed economies, particularly the European Union. By the summer, even local bureaucrats recognized the issue, yet they clung to "data dependency" without taking decisive action. As a result, we are now, in the fall, entering a global era of stagnation.

In regulated economies, attempts were made to restimulate markets, but these efforts are likely to have only temporary effects. With globalization no longer serving as the engine of growth, economies must now restructure on the fly, seeking new avenues for expansion through technological advancements and workforce reductions. However, relying solely on supply-side economic expansion risks social instability. As corporations focus on cost-cutting, governments will be forced to print more money to subsidize rising unemployment and social unrest. The only long-term solution is radical economic decentralization, balancing free-market competition with universal basic income (UBI) and communal ownership of key assets and corporations.

On Tuesday, stocks fell due to Iran's missile strikes on Israel and disappointing economic data. Job openings rose, manufacturing activity remained stagnant, and tech stocks declined, while energy and defense stocks gained. Internationally, Eurozone inflation and manufacturing activity slipped to their lowest levels in years, pointing to stagnation. Oil, gold and the dollar rose as tensions in the Middle East escalated. BTC and ETH dropped sharply to 61K and 2.4K, respectively, as traders sold off a wide range of risky assets.

Details

• The ISM Manufacturing PMI remained at 47.2 in September, indicating continued contraction in the sector. Demand, output, and new orders declined, while prices eased and supplier deliveries slowed. The survey committee chair cited weak demand due to federal policies and election uncertainty as factors contributing to the contraction. 1Y trend: "Side" (ISM)
• The number of job openings in the US increased by 329K in August to 8.04M, exceeding expectations. Job openings rose in construction and government but fell in other services. The number of hires and separations remained relatively stable, while job quits decreased to the lowest level since August 2020. 1Y trend: "Down" (BLS)
• The Dallas Fed’s business activity index for Texas' service sector improved in September, though it remained negative. Revenue increased to its highest level in over a year, while employment remained steady. Companies’ outlook and input price pressures improved, but wage growth slowed. Respondents were more optimistic about future business activity. 1Y trend: "Up"

Crypto

World Markets

• The HCOB Eurozone Manufacturing PMI was revised up slightly in September (to 45 from 44.8, compare to 45.8 in the previous 2 months) but remained the lowest this year, indicating a deeper manufacturing contraction. Demand fell sharply, leading to lower output and job cuts. Input costs decreased, while selling prices rose. There were significant differences between countries. 1Y trend: "Up" (PMI)
• The annual inflation rate in the Eurozone decreased to 1.8% in September 2024, down from 2.2% in August. This is the lowest rate since April 2021 and below the ECB's target of 2%. Prices fell more for energy and slowed for services, while food prices increased slightly. Core inflation also eased. Inflation is expected to rise again later in 2024 and then decline towards 2% in 2025. 1Y trend: "Down" (EC)
• The German manufacturing sector experienced a significant decline in September, with the PMI falling to the lowest point in a year. New orders, output, and employment all decreased, driven by factors like market uncertainty, destocking, and weakness in the auto industry. Purchasing activity and prices also fell due to lower demand. 1Y trend: "Side" (PMI)
• The Russia Manufacturing PMI fell to 49.5 in September, indicating a decline in factory activity first time since April 2022. Output, new orders, and employment all contracted. While foreign sales increased, domestic demand and supplier delays caused disruptions. Job losses accelerated, and backlogs of work decreased. Purchasing activity slowed, and input and output costs rose. Selling prices increased due to higher costs. Business sentiment worsened. 1Y trend: "Up" (PMI)

Currencies

• The dollar strengthened to 101 as investors sought safe havens due to rising tensions between Iran and Israel. While the manufacturing sector contracted, job openings increased, and the Fed hinted at slower interest rate cuts. 1Y trend: "Side"

Commodities

• WTI crude oil prices rose 3% to $70 per barrel after Iran attacked Israel. The oil market's reaction depends on the attack's scope and damage. Libya is preparing to restart oil production after resolving internal conflicts. Libya produces 1.2 million barrels daily, but production fell to 450K barrels in August due to political instability. 1Y trend: "Side"
• Gold prices surged over 1%, reaching $2.66K per ounce, driven by safe-haven demand amid escalating tensions in the Middle East. However, Powell's recent remarks tempered gold's gains, suggesting that future rate cuts would likely be smaller. 1Y trend: "Up"

On Wednesday, stocks rose slightly due to a technical correction, despite mounting tensions in the Middle East. Economic data showed stronger job growth than expected, with 143K private-sector jobs added in September. Defense and energy stocks rose. Internationally, the EU unemployment rate stayed at 6.4%, while oil prices continued to rise due to geopolitical factors. BTC and ETH continued to decline, reaching 60K and 2.2K, respectively, as many investors adopted a risk-off stance.

Details

• Businesses hired 143K workers in September, the most in three months. Job creation rebounded after a five-month slowdown. Manufacturing added jobs for the first time since April. It was led by leisure/hospitality (34K); education/health services (24K); professional/business services (20K); trade/transportation/utilities (14K); and financial activities (2K) while job losses occurred in information (-10K). Year-over-year, pay gains fell slightly for job-stayers and job-changers. 1Y trend: "Side" (ADP)

Crypto

• ETH has declined by 6.18% in 24 hours. Ethereum daily active addresses have declined by 18.32% from 382k to 312k YTD. The decline is attributed to a lack of new investors. (source)

World Markets

• The Euro Area's unemployment rate stayed at 6.4% in August. Since 1995, it has averaged 9.28%, with a peak of 12.2% in January 2013 and a low of 6.4% in April 2024. 1Y trend: "Down" (ES)
• Brazil's industrial activity increased by 2.2% in August compared to the previous year, but this was slower than the 6.1% growth in July. Since 1976, industrial production in Brazil has averaged 1.70%, with a record high of 37.20% in 1991 and a record low of -27.70% in 1990. 1Y trend: "Up" (BR)
• Spain received 10.9M international tourists in August, a 7.3% increase from 2023. France led with 2.1M tourists, followed by the UK and Germany. The Balearic Islands were the main destination, with 22.4% of the total. In the first eight months of 2024, Spain saw an 11.2% increase in tourist arrivals, surpassing 64.3 million. 1Y trend: "Up" (INE)
• The Stanbic IBTC Bank Nigeria PMI was little changed at 49.8 in September 2024, compared to August's 49.9. This indicates a continued deterioration in business conditions which continues, with short pauses, since Feb 2022 (the EU war start). Survey respondents cited challenging demand conditions due to inflation. New orders increased but remained insufficient to prevent a further decline in business activity. 1Y trend: "Down" (PMI)
• Russia's monthly GDP growth slowed to 2.4% in August from 3.5% in July. Since 2005, the average monthly GDP growth has been 1.77%. The highest growth was 11.6% in May 2021, and the lowest was -11.8% in May 2009. 1Y trend: "Down" (RU)

Currencies

• The dollar index rose to over 101.4, due to stronger-than-expected labor market data and geopolitical concerns. A report showed over 140K jobs were added to the private sector in September. This added to evidence that the labor market may not soften as much as expected, reducing expectations for future interest rate cuts. Additionally, dollar demand was supported by concerns of escalated warfare in the Middle East. 1Y trend: "Side"

Commodities

• WTI crude oil futures rose above $71.5 per barrel, driven by fears of a broader Middle East war after Iran's missile launch targeting Israel. EIA data showed a 3.889 million-barrel increase in crude oil inventories previous week, defying expectations of a 1.3 million-barrel draw. 1Y trend: "Side"
• Iron ore prices rose in early October due to China's economic stimulus measures. Trading volume is expected to be low during the Golden Week holiday. China's recent measures to support the property market and boost liquidity are positive for iron ore demand. 1Y trend: "Down"

Comment: What Up With Markets (2)

The Phillips curve (named after economist Phillips in 1950s) suggests that there's a trade-off between inflation and unemployment. According to this theory, if a country has low unemployment, it will likely have higher inflation, and if it has high unemployment, it will likely have lower inflation. This is because when there's high demand for labor (low unemployment), workers can push for higher wages, leading to higher prices (inflation). Conversely, when there's low demand for labor (high unemployment), workers are less likely to push for wage increases, leading to lower prices (deflation).

It is a well-known fact that this curve has not been observed since roughly 2000. Why has this not been adequately addressed? My proposition is that this is due to growing government pressure on private businesses to increase non-productive expenses and to keep employment artificially high due to the unacceptable level of growing social tensions for the ruling class.

In fact, this curve stopped functioning because capitalism stopped working. "Thanks" to Boomers politicians, we are transitioning into a new economic regime that might be called "simulated markets." The elites, who hold more than 80% of all assets, are not interested in competition, as it could lead to their losing all their holdings to newer and smarter generations.

To cover up this "strategy," Boomers have introduced concepts like a "green" economy, ESG, and "progressive economics". However, none of this will change the fact that, faced with global stagnation, we need the economy to grow, which requires cheaper and more abundant labor. While we currently have low inflation, it, however, is accompanied by record-high employment, which leaves no room for businesses (especially SMEs) to renegotiate and lower salaries. This will only lead to the next round of inflation, forcing the government to pressure businesses to raise salaries, and so on.

The situation might improve if all major countries open their borders to mass migration from the underdeveloped world, but, as we all know, that's unacceptable to the majority of the "golden billion." As a result, we are facing a very long period of artificially induced global stagnation, which can only be ended by complete decentralization of economies and the formation of new global regions where "laissez-fair" capitalism can return. All individuals who cannot compete might subsist on UBI or relocate to other regions of the world where competition is less intense and then live happy-ever-after under various "camouflaged socialism" regimes.

On Thursday, stocks finished marginally in the red, while services sector data showed expansion as labor conditions continued to cool. Sentiments soured after Biden hinted at support for Israel striking Iran's oil facilities. Internationally, gold remains near record levels, while oil surged by over 5%. The decline in BTC and ETH has slowed, with their prices hovering around $60K and $2.2K.

Details

• Employers announced 72,821 job cuts in September, down from 75,891 in August. Technology announced the most job cuts (11,430). For Q3, companies announced plans to cut 174,597 jobs, down from Q2 but up 19% from Q3 2023. For the year, companies have announced 609,242 job cuts, up 0.8% from 2023. Experts predict a potential stall or tightening of the labor market. 1Y trend: "Side" (CH)
• The number of people claiming unemployment benefits in the US rose by 6K to 225K on the period ending September 28th, surpassing market expectations. This marks a new three-week high and reinforces the trend of a softening labor market. The four-week moving average for initial claims declined by 750 to 224,250. 1Y trend: "Up" (DOL)
• The Composite PMI was revised down to 54 in September from a preliminary of 54.4, compared to 54.6 in August. This continued to indicate robust growth in the private sector. However, growth was concentrated in the service sector as the manufacturing downturn deepened. Additionally, inflationary pressures strengthened, with increases in input costs and output prices reaching 12- and six-month highs, respectively. 1Y trend: "Up" (SPG)

Crypto

• The IMF is still not pleased with El Salvador’s BTC experiment but will continue to work with the country. The IMF has recommended "limiting public sector exposure to Bitcoin." El Salvador made BTC legal tender in 2021. The IMF has been one of the loudest critics of the BTC move. (source)

World Markets

• The HCOB Eurozone Composite PMI was revised higher to 49.6 in September but still signaling a decrease in total business activity for the first time since February. Services slowed and manufacturing contracted as demand fell at the quickest pace in eight months. Business confidence weakened, and the three biggest economies in the Euro Area recorded contractions simultaneously for the first time in 2024. 1Y trend: "Down" (PMI)
• Producer prices in the Euro Area were down 2.3% YoY in August. 1Y trend: "Up" (EC)

Commodities

• Gold remained near $2,660, trading at record levels due to heightened geopolitical risks. Markets are monitoring developments in the Middle East, as fears intensified after Biden refrained from directly condemning Israel's potential targeting of Iran. Robust labor market data has tempered gold's upward momentum, reducing the necessity for the Fed to implement a more lenient monetary policy. Markets now estimate around a 65% chance that the Fed will opt for a modest 25 bps rate cut in November. 1Y trend: "Up"
• WTI crude oil traded around $73.7 per barrel on Friday, hovering at a four-week high and poised for its highest weekly gain since late March 2023. Escalating conflict in the Middle East continued to pose supply risks. However, supply concerns were alleviated by OPEC's spare production capacity and the continued stability of global crude supplies. 1Y trend: "Side"

On Friday, equities closed higher following a surprisingly strong jobs report. This reinforces Powell's view that the economy is in 'solid condition,' suggesting that the Fed is not in a hurry to cut interest rates. Internationally, silver reached a 12-year high amid geopolitical concerns and China's stimulus. BTC (62K) and ETH (2.4K) started to correct slightly upward on technicals after a week's long crash.

Details

• Economy added 254K jobs in September - the strongest job growth in 6 months, exceeding forecasts. Employment continued to trend up in food services, health care, government, social assistance, and construction. 1Y trend: "Down" (BLS)
• The unemployment rate fell to 4.1% in September, the lowest in three months, from 4.2% in August. 1Y trend: "Down" (BLS)

Crypto

• Binance report warns of inflated valuations and centralized token ownership risks in the cryptocurrency market. These issues could jeopardize the market's long-term stability. Decentralized control and transparency are crucial for trust and sustained growth. (source)

World Markets

• The HCOB Eurozone Construction PMI rose to 42.1 in September, up from a six-month low of 41.4. The reading still indicated a significant slump in total construction activity across the euro area, as new orders continued to decline sharply. 1Y trend: "Down" (PMI)
• The Supply Chain Pressure Index in World decreased to 0.13 points in September from 0.20 points in August of 2024 (average = 0.00 in 1997 - 2024; ATH 4.39 in Dec 2021; ATL -1.56 in May 2023). 1Y trend: "Side" (NYFed)

Currencies

• The dollar index surged 0.5% on Friday, its highest since mid-August, following a stronger-than-expected jobs report that reduced the likelihood of a large interest-rate cut by the Federal Reserve next month. 1Y trend: "Side"

Commodities

• Silver prices rose to $32.1 per ounce in October, the highest in 12 years. Concerns of more aggressive warfare in the Middle East supported safer assets. Additionally, silver also received support from the announcements of aggressive fiscal and monetary stimulus measures to support the world’s second-largest economy. The rise was in line with support for industrial metals, lifting the outlook of silver-intensive manufacturing processes. 1Y trend: "Up"
• The FAO Food Price Index increased 3% to 124.4 in September, the highest level since July 2023. Sugar prices soared 10.4%, driven by concerns over tighter global availabilities. Vegetable oils jumped 4.6%, dairy cost went up 3.8%, cereals rose 3%, and meat cost edged up 0.4%. 1Y trend: "Side"

On Week 41, investors will focus on CPI, FOMC Minutes, and earnings season. Fed officials will give speeches, and data on producer prices, Michigan consumer sentiment, and foreign trade will be released.

SVET Markets Weekly Update (September 23 - 27, 2024)

On Week 39, stocks closed in positive territory, helped by a 3% GDP growth in Q3. In contrast, the eurozone economy contracted in September. The People's Bank of China has implemented several drastic measures to stimulate growth leading to Chinese stock market having a best week since 2008. Silver prices surged to a 12-year high due to the Fed easing and geopolitical tensions. BTC crossed the 200MA and continued to test the $66K mark, while ETH remains stuck below $2.7K.

On Monday, stocks reached new highs, yet again. Intel shares rose on investment news, while Tesla gained ahead of its robotaxi launch. Economic data, however, raised concerns about growth, with manufacturing at a 15-month low and job market indicators weakening. Internationally, EU economy contracted sharply while gold, natural gas, and coffee all rose in a combination of geopolitical and climatic factors. ETH took the lead, slowly rising to 2.7K, while BTC stalled just under its 200MA.

Details

• The manufacturing sector continued to shrink in September, with new orders falling at the fastest pace in over a year. This led to lower production, slower delivery times, and job cuts. Input prices declined to a six-month low due to lower energy costs and reduced supply chain pressures. 1Y trend: "Down" (SP)
• The Chicago Fed National Activity Index increased in August, indicating a slight improvement in economic activity. Production rose, while employment remained stable. Sales, orders, and inventories declined, and personal consumption and housing weakened. The three-month moving average showed a slight decrease. 1Y trend: "Side" (CFed)

Crypto

• Betting odds for Harris and Trump have remained nearly equal since the Sept. 10 debate, with the election approaching. Polls indicate a close race, especially in swing states. Harris currently leads in betting markets, reflecting a 55.6% chance of winning compared to Trump's 50%. Recently, the odds have stayed consistent, with Harris maintaining her polling strength, contrasting with Trump's earlier preference in August. (source)

World Markets

• The eurozone economy contracted in September, with manufacturing and service sectors both declining. Germany and France are both heavily affected after "Olympics effect" dissipated. New orders, backlogs, and exports fell, while job losses rose. Input costs slowed, but output prices increased slightly. Economists warned of impending stagnation. 1Y trend: "Side" (SP)
• The French manufacturing sector continued to contract in September, although the rate of decline slowed slightly. New orders, particularly from North America and Germany, remained weak, leading to a sharp drop in output. Job cuts slowed, and input prices eased. Manufacturers remain pessimistic about future prospects. 1Y trend: "Down" (SP)
• The HCOB Flash Germany Composite PMI fell to a new low in September, indicating a deepening contraction in the private sector. Manufacturing output declined sharply, and service sector growth stalled. Businesses reported weaker demand, reduced investment, and concerns about the economy. Price pressures eased, and business expectations turned pessimistic. 1Y trend: "Side" (SP)
• The Dutch economy grew by 1% in Q2, rebounding from a previous decline. Net trade contributed positively, with exports outpacing imports. Government spending increased, while household consumption fell. Dutch GDP grew by 0.8% on a yearly basis. 1Y trend: "Up" (CBS)

Commodities

• Natural gas prices rose to their highest level in nearly two months (2.5) due to potential supply disruptions from a tropical storm and lower-than-expected storage increases. 1Y trend: "Side"
• Gold prices made new record high, propelled by expectations of lower interest rates and rising geopolitical tensions. The escalating conflict between Israel and Hezbollah has further boosted gold's appeal as a safe-haven asset. 1Y trend: "Up"
• Arabica coffee prices have reached 13-year highs (2.6) due to dry weather in Brazil, the world's largest producer. Forecasts indicate limited rainfall for the rest of September, raising concerns about sufficient October rains. This dry spell is the worst since 1981. Robusta coffee prices are also rising after a typhoon damaged crops in Vietnam. 1Y trend: "Up"

On Tuesday, markets edged up, lifted by Nvidia's surge, despite consumer confidence dipping to a 3-year low and the Richmond manufacturing sector dropping to its lowest level since May 2020. Internationally, Chinese stocks skyrocketed thanks to lavish CCP stimulus. Silver prices also soared over 5%, catching up to gold as investors look for a safe haven. BTC and ETH remain largely unchanged, continuing to demonstrate some upward potential.

Details

• The manufacturing sector in the Richmond 5th District contracted further in September. It is the steepest decline since May 2020, with shipments, employment, and new orders all declining. However, firms remained optimistic about future prospects, expecting improvements in shipments and new orders in the coming months. Prices paid increased while prices received decreased slightly. 1Y trend: "Down" (RFed)
• Home prices rose 5.9% in July, slowing from June but still above 5% for the ninth straight month. New York, Las Vegas, and San Diego saw the biggest increases, while Portland and Denver had the slowest growth. 1Y trend: "Up" (SP)

Crypto

• The crypto exchange Exodus donated $1.3M to Stand With Crypto (SWC), a crypto advocacy group, to support their efforts in the upcoming elections. SWC has endorsed 21 candidates and believes that this year's election is crucial for the future of crypto. With this donation, the total donations to SWC reached $2.79 million. (source)

World Markets

• The PBoC has taken several drastic steps to stimulate the economy, including cutting interest rates and reserve requirements. These measures aim to boost lending, lower borrowing costs, and increase investment. The central bank hopes to achieve the government's growth target of around 5% despite recent economic weakness.

Currencies

• The Chinese yuan appreciated to 16-month-low after the People's Bank of China announced a series of stimulus measures. These measures included interest rate cuts and reductions in reserve requirements. This economic boost is expected to help China achieve its 5% GDP growth target for 2024. 1Y trend: "Down (Strengthened)"

Commodities

• Silver prices soared over 5%, reaching levels not seen since May. This spike was driven by rising tensions in the Middle East and expectations of further US interest rate cuts. Investors sought safe-haven assets like silver amid fears of a renewed Iran-Israel conflict and China's economic stimulus measures. 1Y trend: "Up"

On Wednesday, stocks were mixed, with energy stocks declining while tech stocks gained, led by Nvidia, Intel, and AMD, suggesting strong AI demand. The overall market sentiment remains cautious due to concerns about a slowing economy, despite the recent rate cut. Internationally, the Euro rose (strengthened) to a 14-month high on Fed easing and China stimulus, while Argentina's economy shrank less than expected, confirming some success of Milei's drastic cost-cutting economic policies. BTC and ETH were stalled on 63K and 2.5K.

Details

• The number of building permits issued in the US increased slightly in August MoM. Most regions saw increases, with the Midwest experiencing the largest jump. However, the West saw a slight decline. Single-family home permits and those for larger buildings both rose. 1Y trend: "Down" (Census)
• Mortgage rates have been declining for eight weeks in a row, hitting a new low since September 2022 (6.13%). This drop is due to the Fed's interest rate cut. However, jumbo mortgage rates have increased slightly. 1Y trend: "Down" (MBA)

Crypto

• Despite growing cryptocurrency ownership (15.5% of global 560M holders), its adoption as a payment method remains low. While many Americans own crypto, the majority (80%) still prefer traditional payment methods like credit cards for online shopping (10% prefer mobile wallets), with less than 1% (approximately 0.5%) using crypto. This suggests that crypto is often seen as an investment rather than a daily currency. Additionally, limited availability of crypto as a payment option among retailers (only 4% offer it) further hinders its widespread use. (source)

World Markets

• The consumer confidence index in France increased in September for the first time in seven months. This rise was driven by less pessimism about personal finances and living standards, as well as improved views on savings and employment prospects. However, concerns about future inflation persisted. 1Y trend: "Up" (Insee)
• Argentina's economy shrank less than expected in July , with a 1.3% YoY decline. This improvement was driven by rebounds in utilities and mining, as well as slower contractions in construction and manufacturing. Seasonally adjusted data showed growth, while the trend-cycle indicator slightly declined. 1Y trend: "Side" (Indec)

Currencies

• The Euro rose above $1.11 - 14 month high - due to positive news from China and hints of a rate cut from the Fed. However, disappointing economic data in the Eurozone, particularly in Germany, increased expectations for an ECB rate cut. The Ifo business climate index for Germany fell to 85.4 in September, and recent PMI data showed a return to contraction in the Euro Area. The ECB had already reduced interest rates in September and hinted at more cuts to come. 1Y trend: "Up"

On Thursday, stocks were mixed, with the S&P reaching a new ATH before closing in red, while the Dow gained a bit on the economy showing growth. Semiconductor stocks performed well. Internationally, silver reached a 12-year high, while the Euro area money supply reached a new record of 16.4 trillion. BTC and ETH lingered below 66K and 2.6K

Details

• The economy grew at 3% in Q3, with upward revisions to government spending and imports offsetting slower consumer spending and exports. Overall, the economy performed better than initially estimated in 2023 and 2022. 1Y trend: "Side" (BEA)
• Factory orders unexpectedly held steady (+0%) in August, defying expectations of a decline. While orders for transportation equipment fell, those for fabricated metal products and machinery increased. Overall, excluding transportation, new orders rose, indicating continued strength in the manufacturing sector. 1Y trend: "Side" (Census)

Crypto

• Chainlink forecasts that the tokenized asset market will reach $10T by 2030. Asset managers are finding it challenging to handle these complex and risky assets efficiently. Tokenization offers solutions like real-time settlements, global liquidity, and fractional ownership, making it easier for investors to participate. (source)

World Markets

• The Money Supply M3 in the Euro Area increased to 16.4T euros in August 2024 from 16.3T euros in July. This marks an ATH for the Euro Area's money supply. Trend was reverted to growth since Aug 2023 after 8 months of contraction. 1Y trend: "Up" (ECB)

Commodities

• Silver prices surged to a 12-year high ($32.5/oz) in late September. This rise was fueled by expectations of interest rate cuts by Fed, which were confirmed with a larger-than-expected 50bps cut. The Fed's outlook suggests further easing due to a weakening labor market and softening inflation. Additionally, stimulus measures in China boosted silver prices, benefiting industries like electrification and solar panel manufacturing that rely on silver. 1Y trend: "Up"

On Friday, stocks closed mixed, with the S&P and Nasdaq falling slightly while the Dow reached a new record. Investors weighed recent mixed data. The PCE price index hit its lowest level since Feb 2021, while the Michigan consumer index reached a 5-month high. Internationally, EU economic sentiment declined, while natural gas prices jumped to a 3-month high due to a hurricane causing power outages. BTC crossed the 200MA and continued to test $66K, while ETH is still stuck under $2.7K.

Details

• The PCE price index rose 2.2% in August, the lowest since February 2021. This is down from 2.5% in July and below expectations of 2.3%. 1Y trend: "Side" (BEA)
• The University of Michigan consumer sentiment index rose to 70.1 in September, the highest in five months. This was higher than the preliminary reading and market expectations. Consumers were more optimistic about current conditions and future prospects. Inflation expectations for the next year fell slightly, while those for the next five years rose. 1Y trend: "Down" (SCA)

Crypto

• ETF assets exceeded $10T in September 2024, driven partly by $20B inflows into crypto ETFs. Investors have allocated $691B to US ETFs this year, with crypto ETFs contributing 3%. Bloomberg predicts ETF assets will reach $25T within a decade. (source)

World Markets

• The Euro Area's economic sentiment indicator (ESI) slightly declined in September (96.2) from August's high (96.5). While optimism rose in services, consumer and construction sectors, pessimism deepened in industry and retail. France and Germany saw ESI decline, while Spain and Italy experienced significant increases. Employment expectations remained stable, but economic uncertainty rose. 1Y trend: "Side" (EC)
• Brazil's unemployment rate dropped to 6.6% in August 2024, the lowest since 2014. This is good news for the economy and allows the central bank to raise interest rates to combat inflation. The number of unemployed people decreased by 500,000, while net employment reached a new high of 102.5 million. 1Y trend: "Side" (IBGE)
• China's stock market had a best week since 2008. This followed policy announcements aimed at boosting economic growth, including a cut in bank reserve requirements and interest rates. High-growth sectors like technology, healthcare, consumer, new energy, and finance led the gains. 1Y trend: "Side"

Currencies

• The Japanese yen rose 1% against the dollar after former defense minister Shigeru Ishiba won the leadership of Japan's ruling party. Ishiba is seen as less dovish than his rival, Sanae Takaichi, and favors economic stimulus. Tokyo's core inflation rate slowed to 2% in September, supporting the Bank of Japan's cautious approach to rate hikes. 1Y trend: "Side"

Commodities

• Hurricane Helene caused a 5% surge in natural gas prices. The storm forced Gulf of Mexico producers to cut output, leading to power outages in several states. Despite the storm's impact, LNG exports remained strong, supporting prices. While gas production has been affected, the majority of US output remains secure. Natural gas prices have seen a substantial increase this week. 1Y trend: "Side"

On Week 40, will be busy with the labor market report and speeches from Fed officials, including Powell. Key data to watch includes JOLTS job openings, ISM Manufacturing and Services PMI, and factory orders. Inflation data will be released for several countries, including Germany, Italy, and South Korea. Japan will report on industrial production and retail sales, while China releases PMI data. Australia, Brazil, and South Korea will also report trade data.

SVET Markets Weekly Update (September 16 - 20, 2024)

On Week 38, stocks posted gains after the Fed's 50 basis point rate cut. Accordingly, gold prices surged, reaching a new ATH, buoyed by the Fed's easing measures. In contrast, the Central Banks of China and Japan held rates steady. In the crypto market, BTC initially rose but faced resistance at its 200-day moving average, retreating to around $63K. ETH followed a similar trend but moved more slowly, barely reaching $2.6K before pulling back.

On Monday, stocks traded mixed, with investors awaiting the Fed's interest rate decision on Wednesday. The Dow hit a new ATH, while expectations for a larger rate cut increased, and the energy and financial sectors outperformed as chipmaker stocks fell. Internationally, gold reached a new ATH again, while silver jumped to $31. Meanwhile, BTC and ETH returned to their bearish ranges of $57K and $2.3K after a short-lived attempt at recovery initiated by MicroStrategy's $1B buy-in.

Details

• The NY Empire State Manufacturing Index unexpectedly rose in September to 11.5 - the highest in 2 years - indicating a growth in business activity for the first time in nearly a year. New orders and shipments increased, while labor market conditions remained soft. Firms' optimism about future conditions improved, but capital spending declined. 1Y trend: "Side" (NYFed)

Crypto

• High-net-worth families in North America, Asia Pacific, and Europe are expected to significantly increase their wealth over the next decade by growing their fortunes from $5.5 trillion today to $9.5 trillion in 2030. North American families are projected to experience the largest growth, with their wealth increasing by 258% from $1.12 trillion in 2019 to $4 trillion in 2030. Asia Pacific families are expected to see their wealth grow by 208%, from $650 billion to $2 trillion. Meanwhile, European families are projected to increase their wealth by 157%, from $1.1 trillion to $2.8 trillion. Ultra-high-net-worth individuals are typically defined as those with investable assets of at least $30 million. (source)

World Markets

• Hourly labor costs in the Euro Area rose by 4.7% in Q2 2024, down from 5% in Q1. Wage growth slowed, while non-wage costs increased. Construction, industry, and services saw significant labor cost increases. Germany, France, and Italy experienced moderate rises, while Bulgaria, Croatia, and Romania recorded substantial increases. 1Y trend: "Up" (EU)
• Turkish motor vehicle production fell sharply in August 2024, down 26.7% from the previous year. This decline marks the lowest production level since August 1980. Overall, car production in Turkey has averaged 51,550 units per month since 1974, with a record high of 163,460 units in November 2017. 1Y trend: "Down" (OSD)
• Peru's economy grew significantly (+4.47%) in July YoY, driven by strong manufacturing, mining, and construction sectors. Other sectors like utilities, fishing, and telecommunications also expanded. However, agriculture declined due to adverse weather conditions and early harvesting. Overall, the economy grew by 2.78% in the first seven months of 2024. (PE)

Commodities

• Gold prices reached a new record high (2590), driven by a weaker dollar, lower bond yields, and growing expectations for a significant US interest rate cut. The Fed is likely to cut rates by 50 basis points, according to market expectations. This follows recent economic data showing a softening labor market and declining inflation. The ECB's rate cut also supported gold prices. 1Y trend: "Up"
• Silver prices surged to a two-month high (31), driven by rising expectations of a more aggressive Fed rate cut. Market sentiment shifted towards a larger 50 basis point cut, influenced by signs of a slowing labor market and weaker-than-expected Chinese economic data. 1Y trend: "Up"

On Tuesday, stocks traded flat to the red as investors awaited the Fed's rate decision tomorrow. The market is divided on the size of the expected rate cut (25 or 50 points). Mega-cap stocks showed mixed performance. Retail sales unexpectedly rose in August, defying expectations. Internationally, the economic sentiment for the Euro Area dropped to an eleven-month low. BTC and ETH attempted to surge yet again, with BTC reaching above $60K, where it was met by strong bear resistance, unlikely to soften before political uncertainties ease.

Details

• Retail sales rose slightly in August, defying expectations of a decline. Sales increased in various categories, including miscellaneous stores, nonstore retailers, and health and personal care stores. However, sales fell in sectors like gasoline stations, electronics, and food. Excluding certain categories, retail sales rose 0.3% in August. YoY retail sales rose 2.1% in August compared to the previous year, following a revised 2.9% increase in July. Since 1993, retail sales have averaged 4.75% year-over-year growth, with a record high of 52.5% in April 2021 and a record low of -19.9% in April 2020. 1Y trend: "Down" (Census)
• Industrial production remained unchanged in August YoY. Manufacturing output rose slightly, but mining and utilities production declined. 1Y trend: "Side" (FED)
• The NAHB/Wells Fargo Housing Market Index increased in September, breaking a streak of declines. The gauge for current sales conditions, sales expectations, and buyer traffic all improved. The share of builders cutting prices also decreased. This suggests a slight improvement in the housing market. 1Y trend: "Down" (Nahab)

Crypto

• 65 countries are actively exploring CBDCs. All G20 nations are involved, with 19 in advanced stages. 44 countries are piloting CBDCs, it's 22% increase from previous year. This global trend is driven by declining cash usage and concerns about cryptocurrencies and tech giants' influence on money creation. (source)

World Markets

• The ZEW Indicator of Economic Sentiment for the Euro Area continued to decline in September, reaching an eleven-month low. This reflects growing uncertainty about the economy and monetary policies. Analysts are divided on the outlook, with more expecting no change or a deterioration. The current economic situation and inflation expectations have also worsened. 1Y trend: "Down" (ZEW)
• Japan's trade deficit narrowed in August, but remained above expectations. Exports increased for the ninth consecutive month, but at a slower pace than forecast. Imports grew at the slowest rate in five months, falling short of estimates. 1Y trend: "Up (improved)" (JP)
• India's trade deficit widened to $29.7 billion in August, the highest in ten months. Exports declined by 9.3%, while imports increased by 3.3%. Rising shipping costs and a slowdown in China are impacting exports. 1Y trend: "Down (worsen)" (IN)
• Mongolia's trade surplus narrowed in August, primarily due to a surge in imports, particularly of vehicles, machinery, and appliances. Exports grew at a slower pace, led by sales of natural stones and precious metals. China was Mongolia's largest trading partner (exports - 91.9%, imports - 40.2%; Russian exports - 25%), both for imports and exports. 1Y trend: "Down (worsen)" (MN)
• Indonesia's trade surplus narrowed in August despite a surge in exports. Exports to major markets like the US, Japan, ASEAN, and the EU grew significantly. However, imports also rose due to government import duties. For the year, Indonesia's trade balance remains positive but has declined compared to the previous year. 1Y trend: "Side" (ID)

Commodities

• Sugar prices have risen (20) due to lower production in Brazil and rising oil prices. While India's large crop and Thailand's production challenges have influenced prices, overall global supply concerns remain. 1Y trend: "Down"
• Palladium prices hit a five-month high (1040), driven by increased ETF holdings, primarily due to rising European demand. Analysts predict that palladium prices may face downward pressure in the long term due to potential decreases in global vehicle production and the substitution of palladium with platinum in autocatalysts. 1Y trend: "Side"

Comment: What's Up With International Trade

From the yearly trends, it is evident that, despite the nationalistic rhetoric from politicians and the buoyant patriotic sentiments among consumers worldwide, there is already a clear delineation between the winners and losers in this childish yet brutal game of 'millennia-old national prestige and hereditary honor.'

As expected, the winners are economies characterized by a strong technological base and a focus on high-quality machinery exports, such as Belgium and Japan. In contrast, the losers are primarily natural resources exports orientated nations and major agricultural goods producers, such as Mongolia, Indonesia and India.

It is important to note that this does not imply that these economies are not experiencing growth. For instance, India reported a year-on-year GDP increase of 8-9%, making it the best-performing economy on Earth in 2024. However, this growth is driven by low-tech industries and service-oriented internal consumption, particularly in densely populated countries.

Additionally, the exports from resource-driven economies have been significantly impacted by the slowing Chinese market, which, due to the policies of CCP, has become increasingly closed off to external goods and services.

As a result, the world is gradually entering a new era marked by self-isolation from advancements in technology under the guise of 'sovereignty.' Many nations are relying on their large and still-growing populations and internal markets, which have been bolstered over the past 40 years by unprecedented economic openness and cooperation.

This shift may lead to a sharp drop in the standard of living, particularly for the lower-income strata of the population. Also, it could also exacerbate internal conflicts, ultimately resulting in increased migratory movements of people driven by desperation.

On Wednesday, stocks finished lower after the Fed cut rates by 50 basis points. While the initial market reaction was positive—during which the S&P hit a new ATH (5692)—Powell's comments tempered optimism. Overall, investors remain cautious despite the aggressive rate cut, as the Fed hinted at a slower pace of future cuts. Tech stocks, including Nvidia, Microsoft, Oracle, and AMD, declined, while Apple gained. Internationally, many smaller central banks, which are overly dependent on the dollar in their oil trade, such as Saudi Arabia, the UAE, Bahrain, Qatar, and Kuwait, cut their rates in unison with the Fed by 25 to 50 basis points. BTC jumped above $61K but quickly retreated due to short-lived investor optimism about the Fed's jumbo rate cut, while ETH remained unperturbed.

Details

• The Fed cut interest rates by 50 basis points to 4.75%-5%, marking the first rate reduction since the pandemic. They forecast further rate cuts in the coming years to slow inflation. While inflation projections were lowered, economic growth forecasts were slightly reduced. The unemployment rate is expected to rise slightly. Interest Rate Projection - 1st Yr 3.4%; 2nd Yr 2.9%; 3rd Yr 2.9%; Longer 2.9%. 1Y trend: "Up" (Fed)
• Building permits increased in August, reaching a five-month high. Multi-family and single-family permits both rose, with the Midwest seeing the largest increase. The West was the only region with a decline. 1Y trend: "Down" (Census)
• Housing starts in the US rebounded in August, increasing by 9.6% from the previous month (ATH 29.30, July 1982; ATL -26.40, March 1984). This follows a revised decline of 6.9% in July. The annualized rate of housing starts reached 1.356 million units in August. 1Y trend: "Up" (Census)

Crypto

• Bhutan has secretly amassed significantly more BTC than El Salvador, making it a major player in the crypto space. While El Salvador has been publicly embracing BTC, Bhutan has quietly accumulated 13,029 BTC (compare to 2,381 BTC accumulated by El Salvador), valued at over $758 million. This revelation highlights Bhutan's growing influence in the crypto world and suggests a broader trend of nations adopting cryptocurrency. (source)

World Markets

• Eurozone inflation slowed to a two-year low (2.2% from 2.6%) in August, primarily due to lower energy prices. Core inflation also declined slightly (2.8% from 2.9%). Most major economies saw inflation rates decrease with a sharp drops observed in Germany (2% vs 2.6%) and France (2.2% vs 2.7%), but a few smaller countries experienced increases (Latvia, Malta, Finland and Slovakia). The ECB forecasts inflation to remain above its target for the next few years. 1Y trend: "Down" (EC)
• The Central Bank of Brazil raised its interest rate by 25 basis points to 10.75% in September after more than a year-long cuts (reducing the rate from 13.75% to 10.5%). This decision was in line with expectations and aimed to address inflation concerns. The stronger-than-expected economy and labor market, along with rising inflation projections, prompted the rate hike. Future rate adjustments will depend on inflation trends and economic conditions. 1Y trend: "Down" (BCB)
• Ghana's economy grew at its fastest pace (+6.9%) in five years in Q2 2024, driven by growth in services, industry, and agriculture. The gold sector continued to expand growing by 23.6% for the third consecutive quarter, while cocoa production declined. Ghana is recovering from a debt restructuring and is implementing IMF austerity measures. (GH)

Currencies

• The dollar index fell to a July low (100.4) after the Fed announced a larger-than-expected rate cut. While the cut was expected, the central bank hinted at further easing, causing the dollar to weaken against major currencies. However, Fed Chair Powell emphasized that the central bank is not in a hurry to cut rates. 1Y trend: "Side"

Commodities

• Gold prices surged to a new record high (2594) after the Fed cut interest rates by 50 basis points, marking the first rate cut in over four years. The Fed also signaled plans for further rate reductions by the end of the year. 1Y trend: "Up"

Comment: What's Up With Argentina?

Introduction

Argentina's economic narrative in 2024 has been a mixture of remarkable stock market performance and troubling macroeconomic indicators. While the Merval, Argentina's main stock market index, surged by 885,999 points—or an impressive 95.30%—since the beginning of the year, other crucial economic factors tell a more complex tale.

Stock Market Surge vs. Economic Contraction

The stock market's meteoric rise stands in stark contrast to Argentina's GDP dynamics. The GDP contracted by 1.70 percent in the second quarter of 2024 compared to the previous quarter, highlighting a troubling economic environment. Historically, Argentina's GDP growth rate averaged a modest 0.46 percent from 1993 until 2024, with significant fluctuations. It peaked at 10.94 percent during the third quarter of 2020 but suffered a shocking decline of -13.95 percent in the second quarter of the same year.

This juxtaposition raises an essential question: How can the stock market thrive amid a contracting economy? One possible explanation is that the stock market often serves as a forward-looking indicator, reacting to investor sentiment and external factors rather than the immediate economic landscape. It also suggests that certain sectors may be experiencing growth, even as the broader economy struggles.

Rising Unemployment Amid Economic Fluctuations

Another critical aspect of Argentina's economic condition is the unemployment rate, which rose to 7.7% in the first quarter of 2024. This figure represents a rise from the previous low of 5.7%, which had been the lowest in over two decades. Comparatively, the unemployment rate reached a record of 20% at the beginning of the 2000s. Increasing unemployment during a stock market boom indicates that the benefits of the market's success are not being evenly distributed across the population.

Inflation Dynamics

Inflation in Argentina has been a longstanding challenge, with consumer prices skyrocketing by 236.7% in August 2024 alone. This figure marks the fourth month of disinflation, a welcome development compared to the steep increase of 263.4% in July. Historically, the inflation rate in Argentina has averaged 190.49% from 1944 to 2024, with a peak of a staggering 20,262.80% in March 1990. The volatility of inflation reflects the broader economic instability that affects many sectors of the economy and significantly undermines consumer confidence, which has remained suppressed, often staying below 50.

Central Bank Policies and Challenges

In response to slowing inflation, Argentina's central bank decreased the benchmark interest rate from 50% to 40% on May 15, 2024. This reduction is notable, as it marks the sixth adjustment since December, placing rates at their lowest since June 2022. Traditionally, interest rates in Argentina have been exceedingly high, often exceeding 30%. The high rates are influenced by the tussle between populist governments that increase spending and monetary authorities striving to control inflation.

The interplay of these factors perpetuates a cycle of mistrust among the populace. With a legacy of oscillating between capitalism and socialism over the decades, Argentina's citizens find themselves increasingly skeptical of governmental efficacy, leading to a surge in interest in cryptocurrencies as an alternative financial strategy.

The Need for Governance Reform

The complex economic landscape in Argentina highlights the urgent need for a governance structure that prioritizes decentralization and rationalization of powers. Continuous fluctuations and inconsistencies in policy, coupled with high inflation and unemployment, have resulted in a lack of confidence among citizens. Addressing these issues is critical for fostering a stable and sustainable economic environment.

Conclusion

Argentina serves as a prime example of the struggles faced by nations attempting to navigate between competing economic ideologies. The stark divergence between a booming stock market and a contracting economy, rising unemployment, and persistent inflation illustrates the challenges inherent in such a landscape. Ultimately, without significant reforms and a shift towards greater decentralization, Argentina risks remaining trapped in a cycle of economic uncertainty, consumer distrust, and missed opportunities for sustainable growth.

On Thursday, stocks surged, fueled by optimism about a soft economic landing following the Fed's rate cut, which was supported by a decline in weekly jobless claims. The Dow (42,000) and S&P reached new ATHs, led by tech stocks and sectors tied to economic growth. Internationally, several major stock indexes, including Germany's DAX, India's SENSEX, and Australia's ASX200, hit new ATHs. At the same time, there might be a divergence in main central banks' monetary policies, as the Bank of England left interest rates steady at 5%. Meanwhile, ETH (+4%) closed above 2.4K, outperforming BTC (63K, +2%) for the first time in several months, while the rest of the crypto market followed with SOL, BCH, and AVAX rising more than 7%.

Details

• The Philadelphia Fed Manufacturing Index rebounded in September to 1.7 from -7, but remained below optimistic forecasts. While current activity improved, new orders and shipments declined. Employment rose, and prices continued to increase. Businesses remain optimistic about future growth. 1Y trend: "Up" (PhFed)
• Existing home sales declined in August despite lower mortgage rates. The median home price decreased to $416,900, and the inventory of unsold homes increased. 1Y trend: "Down" (NAR)

Crypto

• Coinbase's Stand With Crypto initiative has potentially registered over 140,000 people to vote in the 2024 elections through its voter registration tool. The campaign has seen significant engagement since its launch. (source)

World Markets

• Passenger car registrations in the EU declined sharply in August, reversing sharply by 18.3% the growth seen in July. All major markets experienced double-digit declines, with Germany and France suffering the steepest drops. Battery electric car registrations also fell significantly (-43.9%), with market share decreasing. However, overall car registrations for the year remained slightly positive, driven by growth in the first half. 1Y trend: "Up" (Acea)
• The Bank of England held its interest rate steady at 5% in September, despite expectations for a small cut. Inflation is expected to rise slightly due to energy price comparisons. Wage growth slowed, and GDP growth is forecast to recover. The Bank also decided to reduce its bond holdings by £100 billion. 1Y trend: "Up" (UK)
• The South African Reserve Bank cut its interest rate by 25 basis points to 8% due to easing inflation (4.4%). It's SARB's first policy easing since 2020. The central bank expects inflation to remain below its target range and economic growth to improve. 1Y trend: "Side"
• The Central Bank of Turkey kept its benchmark interest rate unchanged at 50% in August, despite slowing inflation. While the bank acknowledged the inflationary risks posed by high inflation expectations, it also noted the positive impact of high interest rates on domestic demand. The central bank emphasized its flexibility to adjust monetary policy as needed, indicating a potential shift away from its previous stance of only raising rates in response to economic challenges. 1Y trend: "Up" (TR)
• Malaysia's trade surplus narrowed significantly in August (to MYR 5.7B from 17.2B YoY), falling to the lowest level in six years. Imports surged, while exports grew at a slower pace. For the first eight months of 2024, the trade surplus declined by nearly 50%, with imports outpacing exports. 1Y trend: "Down" (Dosm)

On Friday, stocks traded mixed, following a volatile week. The S&P and Nasdaq declined slightly, while the Dow rose. Fed policymakers had differing views on inflation, with one supporting a larger rate cut and another warning against premature action. For the week, stocks posted gains. Internationally, the Central Banks of China and Japan held their rates steady, while gold reached new ATH on the Fed's easing. BTC rose until it hit its 200-day moving average and then retreated to around 63K. ETH followed but at a much slower pace, barely reaching 2.6K.

Crypto

• Solana (SOL) has over 75 million monthly active addresses. However, traders remain cautious about its prospects as technicals indicate a southward trend. This exemplifies how detrimental political considerations are for crypto markets, where even coins with rapidly growing user numbers are unable to perform well due to negative expectations about the regulatory climate.

World Markets

• Consumer confidence in the Euro Area and European Union improved in September, reaching the highest levels since early 2022 (-12.9) but still remained negative. This positive trend follows recent interest rate cuts by the European Central Bank. 1Y trend: "Up" (EC)
• The People's Bank of China (PBoC) kept its key lending rates unchanged in September at 3.35%, aligning with market expectations. This decision came despite a rate-cutting cycle in the US and uncertainty in China's economic recovery. The PBoC focused on short-term rates and delayed a medium-term lending facility operation. 1Y trend: "Down" (PBC)
• India's foreign exchange reserves reached a new high of $689.5B in September, driven by strong capital inflows. The Sensex hit a record high, and the 10-year G-Sec yield fell below 6.8%. The RBI likely purchased foreign exchange to support Indian exports and maintain currency competitiveness. 1Y trend: "Up" (RBI)
The Bank of Japan maintained its key interest rate at 0.25% in September, signaling a cautious approach to further tightening. The central bank expressed concerns about financial market volatility and the need for more time to assess economic conditions. While Japan's economy is recovering, some areas remain weak. Inflation has risen, but underlying inflation is expected to increase gradually.
• 1Y trend: "Up" (BoJ)
• Turkey's government debt increased in August 2024 to a new ATH of 8.34T TRY. It's 4x in 4 years. The debt has been on an upward trend in recent years, rising significantly from its record low of 15 TRY million in 1986. 1Y trend: "Up" (TR)
• Spain's trade deficit narrowed in July to 3.2B (2016 level), with exports growing faster than imports. Exports increased in various sectors, led by food, energy, and raw materials. Imports also rose, but at a slower pace, with declines in automotive products, capital goods, and energy. 1Y trend: "Up (Decreasing)" (ES)
• Switzerland's current account surplus rose to a 1.5-year high in Q2. The surplus increased due to a wider goods surplus and a narrower services deficit. Secondary income deficit declined sharply, while primary income deficit rose slightly. 1Y trend: "Up (Decreasing)" (CH)
• Namibia's economy grew by 3.5% in Q2 2024, driven by financial services and trade. The financial services sector expanded by 30%, with insurance and banking subsectors leading the growth. Mining and quarrying contracted due to lower diamond and uranium production. Agriculture and forestry also shrank due to insufficient rainfall. 1Y trend: "Side" (NSA)

Currencies

• The Brazilian real appreciated against the dollar in September, reaching a one-month high (5.45). This was driven by the Brazilian central bank's interest rate hike and the US Federal Reserve's unexpected rate cut. While inflation in Brazil has eased, concerns about government spending and its long-term impact on inflation led to the rate hike. The larger interest rate differential between Brazil and the US also favored the real. 1Y trend: "Up (Depreciates)"

Commodities

• Gold prices hit a record high (2622) on Friday, driven by expectations of lower interest rates and rising geopolitical tensions. The Fed's recent rate cut and projections for further cuts boosted gold's appeal. Additionally, escalating tensions in the Middle East increased demand for gold as a safe-haven asset. 1Y trend: "Up"

Week 39, will feature inflation data, consumer spending, and Fed speeches. Globally, PMI data, interest rate decisions, and inflation reports will be released for various countries.

Comment: What's Up With Spain?

Spain's trade deficit is at its lowest level in nearly a decade. The country is uniquely positioned to benefit from the current imbalances in the global economy, as supply chains are periodically disrupted by poor global management, leading to the semi-enclosure of entire geographical regions. These disruptions have significantly impacted energy and food markets and have recently extended to technology access, which has been artificially restricted by producing countries citing "national security" concerns.

Spain, with its well-developed agricultural and industrial sectors, has the opportunity to capture market share in the European Union's food market from Eastern European countries affected by the war, as well as from Africa, where agricultural producers are facing rising costs due to increasing prices of exported chemicals and agricultural machinery. Additionally, the decline in energy prices—resulting from the EU's adjustment to the initial price shock—has enabled Spanish machinery producers to continue exporting their high-value-added industrial products.

SVET Markets Weekly Update (September 9 - 13, 2024)

On Week 37, stocks continued to rise, driven by strong performance in the tech and semiconductor sectors. Economic data, including inflation and the PPI, indicated signs of easing, bolstering expectations for a 50-point rate cut by the Fed. Internationally, gold reached a new ATH, and silver surged above USD 30 amid concerns about a slowing economy and potential rate cuts. BTC and ETH faced challenges in maintaining their positions ahead of the presidential debate. As investors anticipated a better performance from Trump, demand for digital assets slumped, causing BTC to dip below 57K. Meanwhile, ETH struggled to hold above 2.3K. However, both cryptocurrencies surged following MicroStrategy's announcement of a USD 1B BTC purchase.

On Monday, stocks attempted to rebound after a rough week, driven by investor optimism about lower prices and a potential rate cut. Investors are now focused on Wednesday's inflation data to gauge the Fed's upcoming policy decision on September 18. Internationally, the Chinese yuan weakened as the latest inflation data showed weak economic performance despite the CPC's efforts. BTC crossed above 57K, while ETH lingers above 2.3k, continuing to lag significantly behind BTC after three consecutive "red" months—the worst performance for ETH since 2018. In other news, El Salvador is marking the third anniversary of its BTC holdings, with more than 25% overall profits on its 5,800 BTC holding, placing it third in the world among governments.

Details

• Consumer credit surged by 25.45B in July, exceeding expectations (12.5). Credit card balances and other loans both saw significant increases, indicating strong demand for credit despite economic concerns. 1Y trend: "Side" (source)

Crypto

• El Salvador made its first BTC purchase in September 6, 2021, shortly before adopting BTC as legal tender. Since then, the country has significantly increased its BTC holdings. As of now, El Salvador owns over 5,800 BTC, with substantial profits (25.88% gain). The country is currently the third-largest government holder of BTC globally.

World Markets

• Japan's GDP grew by 0.7% at a stronger pace in Q2 2024 than previously expected, mainly due to higher wages and a recovery in the automotive industry. While private consumption and business investment increased, government spending and net trade contributed less to the growth. 1Y trend: "Down" (CAO)
• Taiwan's exports surged 16.8% in August, driven by strong sales of technology products. Shipments to the US, ASEAN, Europe, and China & Hong Kong all increased significantly. Overall, exports for the first eight months of 2024 were up 10.9% compared to the previous year. 1Y trend: "Up" (MOF)

Currencies

• The dollar remained relatively stable as investors weighed the potential for a Fed interest rate cut on upcoming September 18 meeting. The recent jobs report showed mixed results, with fewer jobs added than expected but a lower unemployment rate and steady wage growth. Markets are divided on the size of the rate cut, with some expecting a larger reduction. Investors will closely watch inflation data this week for more clues on the Fed's decision. 1Y trend: "Side"
• The Chinese yuan weakened against the dollar (7.11) as inflation data revealed a modest increase in consumer prices but a sharper decline in producer prices. This indicates a challenging economic environment for China, with weak domestic demand and slowing growth. 1Y trend: "Side"

Commodities

• Natural gas prices dropped 4% due to an incoming storm expected to reduce demand in Louisiana. The storm could cause power outages and disrupt LNG exports. While past hurricanes impacted supply, today's storms mainly affect demand as most US gas comes from inland sources. Oversupply and mild winter weather have also contributed to lower prices. Production cuts have helped stabilize prices. 1Y trend: "Side"

Comment: What's Up With Japan?

The Japanese yen has slipped toward 143 per dollar; however, it remains far from the record highs of 300 reached during the peak of Japan's economic miracle in the 1980s, before the Plaza Accord, which devastated Japanese manufacturing.

Recently, the Japan Stock Market Index (JP225) achieved an all-time high (ATH) above 40,000, driven by a continuing appreciation of Japanese assets. Notably, this rise in asset values has not been accompanied by corresponding GDP growth, which has consistently stayed below 2%—a stark contrast to the impressive 8% growth experienced during the 1980s boom.

Traditionally, Japan’s unemployment rate has been very low, ranging from 2% to 3%, and was even below 2% during the 1980s. The rate tends to reach a maximum of approximately 5% during times of crisis, such as between 2007 and 2010. This low unemployment situation indicates a limited pool of additional labor resources available for Japanese entrepreneurs to enhance local productivity.

In terms of inflation, Japan has also historically maintained low annual rates. As of July 2024, the inflation rate was recorded at 2.8%. However, this is significantly lower than the peak inflation rates of around 25% in the 1970s and 10% in the 1980s. The Japanese central bank has sustained a very loose monetary policy, keeping interest rates below 1% since the 1990s, compared to an 8% rate in the 1980s. Despite this accommodative policy, economic growth has remained elusive.

Business confidence in Japan has been notably weak, rarely surpassing the 20 mark and remaining mostly below zero since the 1990s. Similarly, consumer confidence has been on a downward trend on average since the 1980s, declining from a level of 50 to recent figures of approximately 20 to 30.

In summary, the Japanese economy serves as a poignant example of how countries with limited natural resources but high-value human capital and excellent technological capabilities can mismanage their economic potential. This mismanagement is often driven by ingrained nationalistic tendencies and overly conservative political attitudes that shy away from "risky" initiatives and revolutionary social and political reforms.

On Tuesday, stocks traded mixed, with tech stocks outperforming banking shares as investors reacted to lower earnings expectations. The market awaited a crucial inflation report that could influence Fed rate cuts. Internationally, China's car sales declined amid an ongoing economic slowdown. BTC strengthened its position slightly prior to the presidential debate, as investors anticipated Trump's better performance and fueled demand for digital assets. However, BTC trading fluctuated based on how well the debates were unfolding dipping below 57K. Meanwhile, ETH continued to struggle to maintain a price above 2.3K.

Details

• The NFIB Small Business Optimism Index fell to 91.2 in August to its lowest level in three months. Inflation remains a major concern for small business owners, as sales expectations decline and costs rise. Uncertainty among owners is increasing, and fewer expect improved business conditions in the future. 1Y trend: "Side" (Nfib)

Crypto

• Wealth advisers (as opposed to TradeFi) are rapidly adopting BTC ETFs, despite their overall flows being overshadowed by other investors. Some argue that this adoption is unprecedented, even if it seems small compared to the total ETF inflows. BlackRock's BTC ETF has attracted significant inflows. (source)

World Markets

• China's car sales declined YoY by 5.0% (vs. 5.2% in a previous month) to 2.45M units in August but outperformed expectations. New energy vehicle sales continued to grow strongly, accounting for nearly half of total car sales. Overall, vehicle sales for the first eight months of 2024 increased slightly. 1Y trend: "Down" (Caam)
• The Reuters Tankan sentiment index for Japanese manufacturers declined (to +4 from +10) in September due to concerns about sluggish Chinese demand and a global electric vehicle slowdown. Manufacturers anticipate further deterioration in sentiment over the next three months. However, some respondents noted signs of recovery in the semiconductor market, particularly for high-end products. 1Y trend: "Side" (Tankan)
• Brazil's inflation rate slowed in August to 4.24%, falling below expectations. Prices for transportation, housing, health, and personal expenses declined, while food prices rose. Overall consumer prices remained relatively stable compared to the previous month. Housing costs contributed the most to the decline, offsetting increases in fuel and transportation prices. 1Y trend: "Side" (IBGE)

Currencies

• The Brazilian real weakened past 5.66 against the dollar due to a stronger dollar and concerns about Brazil's fiscal policy. There's on-going fight between the presidential office and the central bank. On the one side, inflation eased slightly in August but didn't change the central bank's hawkish stance. On the other, rising inflationary pressures is exacerbated by increased government spending prompting a rate hike. The budget deficit has widened, raising concerns about the sustainability of the government's expansionary fiscal approach. Overall, as inflation seems to be mild (3-4%) even compare to North America's, this fight looks more politically than economically enhanced. 1Y trend: "Up"

Commodities

• Urals oil prices fell sharply to a four-week low of 66 due to concerns about rising oil supply. Libya's potential oil production resumption and OPEC's planned output increase are adding pressure to prices. Weakening demand in China, a major oil consumer, further contributes to the decline in oil prices. 1Y trend: "Side"

Comment: What's Up With BTC?

It appears that crypto hasn't made the cut on Harris and Schumer's to-do lists, which might mean that the DEM's brief flirtation with crypto was just a knee-jerk reaction to Trump's BTC bonanza in Nashville. Or maybe they're holding out for the results of this month's crypto-related hearings before taking a harder stance. Either way, if Harris takes the presidency, BTC could tank to $30K-$40K, but if Trump wins, it might soar to $80K-$90K. With Dems focusing on pro big-corporate AI policy chats, the crypto market now stakes on GOP.

On Wednesday, stocks rallied, led by tech stocks, as inflation eased. The S&P and Nasdaq surged, with chipmakers driving the gains. However, core inflation rose, suggesting a smaller Fed rate cut. Internationally, the British economy stagnated for the second month in a row as Chinese stocks approached their yearly lows. Meanwhile, BTC and ETH continued to dip after Trump's lackluster performance during the debate.

Details

• Inflation slowed in August to a 3-year low of 2.5% (from 2.9). Energy prices fell, while food and transportation inflation eased. However, shelter costs rose. Core inflation remained steady, but monthly core inflation increased slightly. 1Y trend: "Down" (BLS)

Crypto

• Polymarket experienced significant changes in the betting odds for the upcoming election between Donald Trump and Kamala Harris following their recent debate. Trump's odds dropped from 52% to 49%, while Harris’s rose from 47% to 50%, giving her a brief lead. The odds eventually evened to 49% each, with Trump slightly regaining a 50% lead. This shift also caused a flash crash in Trump-themed tokens, with some losing up to 30% in value. (source)

World Markets

• The British economy stagnated (0%) in July for the second consecutive month, falling short of expectations. The services sector grew slightly, while manufacturing and construction declined. Despite this, the economy expanded by 0.5% over the three months to July. 1Y trend: "Up" (UK)
• Argentina's consumer prices rose by 4.2%, exceeding expectations (3.9%). While annual inflation eased to 236.7%, it remains high. Housing, transportation, and food costs rose more rapidly, while healthcare and restaurant prices increased at a slower pace. 1Y trend: "Up" (Indec)

Currencies

• The Japanese yen strengthened to yearly highs (142) as interest rate differentials between Japan and the Fed widened. A Bank of Japan official indicated continued rate hikes to combat inflation. The Fed is expected to cut rates soon. Japanese manufacturing sentiment fell in September due to weak Chinese demand. 1Y trend: "Side"

Commodities

• Crude oil prices rebounded after a sharp decline, driven by OPEC's reduced demand forecast and slowing Chinese imports. Inventories rose less than expected, but demand concerns remain due to electric vehicles and hurricane threats. 1Y trend: "Side"
• Natural gas prices rose to a two-month high (2.27) due to increased demand, record LNG exports, and China's growing gas use. Despite record production, rising demand and potential supply disruptions could tighten the market and push prices higher. 1Y trend: "Side"

On Thursday, stocks continued to rise, fueled by strong performance in the tech and semiconductor sectors. Economic data, including the PPI, showed signs of easing inflation, supporting expectations for a 25-point rate cut by the Fed. Globally, gold reached a new ATH, while silver surged due to China's revised green technology prospects. BTC and ETH remained at 58K and 2.3K, respectively, suppressed by political uncertainties.

Details

• Factory gate prices (PPI) rose slightly in August (0.2%), driven by increases in services costs, particularly guestroom rentals. While goods prices remained unchanged, there were mixed trends within the category. Overall, producer price inflation slowed year-over-year, but core inflation increased to 2.4% from previous 2.3% while 2.5% was expected. 1Y trend: "Side"
• The budget deficit soared to $380 billion in August 2024 - biggest in nearly 2 years - reversing previous year's surplus. Spending surged due to increased Medicare and Social Security costs, while revenue grew at a slower pace. The yearly deficit reached $1.897 trillion, with interest payments exceeding $1 trillion for the first time. 1Y trend: "Down (deficit is growing)" (GOV)

Crypto

• India has maintained its top position in global crypto adoption, despite strict regulations. Nigeria and Indonesia have also shown significant growth. The US, despite increased media attention, has fallen to fourth place. (source)

World Markets

• The ECB lowered interest rates by 25 basis points to 3.5%. Inflation projections remain unchanged, but core inflation is expected to decline. The ECB remains committed to achieving its 2% inflation target, adjusting rates as needed. Domestic inflation pressures are elevated but are being moderated. 1Y trend: "Up" (ECB)

Commodities

• Gold prices surged to a new record high (2561), driven by expectations of a Fed rate cut and signs of a slowing economy. Jobless claims rose slightly, while producer prices increased moderately. The ECB also cut rates, reflecting confidence in declining inflation. 1Y trend: "Up"
• Silver prices surged on Thursday due to expectations of rate cuts by major central banks. The ECB recently lowered rates, and markets anticipate the Fed to follow suit. Also some traders are re-evaluating China's demand for silver in renewable energy. 1Y trend: "Up"

On Friday, stocks continued to rise on momentum, fueled by expectations of a 50-basis-point Fed rate cut due to lower inflation and rising unemployment. Tech and semiconductor stocks led the rally. Internationally, gold reached a new ATH while silver surged past 30 as industrial production in the Eurozone declined. BTC climbed above 60K, while ETH broke past 2.4, following MicroStrategy's announcement of purchasing 1B worth of BTC.

Details

• The University of Michigan’s consumer sentiment index rose in September, reaching its highest point since May. Consumers’ optimism about future financial conditions and the economy improved, while inflation expectations for the coming year declined. However, long-term inflation expectations rose slightly. 1Y trend: "Up" (SCA)

Crypto

• PolitiFi meme coins, inspired by political figures, have experienced a significant price drop after a strong first half of 2024. Despite the upcoming US elections and growing political interest in crypto, these tokens have lost nearly 90% of their peak value. The decline is attributed to a combination of factors, including the broader crypto market's volatility and the waning excitement surrounding spot BTC ETFs. (source)

World Markets

• Industrial production in the Eurozone fell by 2.2% in July YoY. This marks a decline from the average growth rate of 0.89% since 1991. The highest level (41.4) was recorded in April 2021, while the lowest point (-28.4) was in April 2020. 1Y trend: "Down" (EU)
• Chinese banks increased lending in August to CNY 900B , but the total remained below expectations. Outstanding loans grew at a slower pace (8.5%), indicating weaker demand. Total social financing rose (CNY 3030B), but remained below year-ago levels (CNY 31279). The PBoC's rate cuts have not significantly boosted credit appetite, partly due to government regulations. 1Y trend: "Down" (CN)
• The IBC-Br, a leading indicator of Brazil's economic activity, declined in July by 0.4% after three consecutive months of growth. Industry activity fell sharply, while services and retail sectors expanded. Despite the July decline, the IBC-Br remains higher compared to previous year. 1Y trend: "Up" (BCB)
• The Russian ruble weakened past 91 as the central bank raised interest rates (19%) to combat rising inflation (7%). Increased government military spending has fueled inflation, leading to concerns about stagflation. 1Y trend: "Side"

Commodities

• Gold hit a record high (2580) due to a weaker dollar and lower bond yields. Rising jobless claims and stronger-than-expected producer prices fueled expectations of more aggressive Fed rate cuts. The ECB also cut rates as anticipated, indicating confidence in declining inflation. 1Y trend: "Up"
• Silver prices surged past 30 this week due to speculation of a larger-than-expected Fed rate cut. China's economic outlook and growing renewable energy sector are also influencing silver demand. 1Y trend: "Up"

On Week 38, investors focus will be on the Fed meeting at Wed, Sept 18 as well on other central banks worldwide which will announce interest rate decisions, including the Bank of England and Bank of Japan. Economic data releases will focus on inflation, retail sales, manufacturing activity, housing indicators, and GDP growth.

SVET Markets Weekly Update (September 2 - 6, 2024)

On Week 36, global stocks took a hit, driven by concerns about a weakening labor market and a slump in the tech sector. Locally, job cuts increased significantly, while the unemployment rate remained steady. Crude oil prices plummeted to a thirteen-month low amid fears of a global economic slowdown. In the Eurozone, private sector activity strengthened, except in Germany. BTC and ETH plunged, targeting 50K and 2K, respectively, as the Ethereum Foundation increased its selling activity.

On Tuesday, stocks plunged, led by technology and economic concerns, with Nvidia and other chipmakers suffering significant downs. Communication services stocks also underperformed. Weak factory data added to the market's woes, raising concerns about the economy and Fed's potential actions. Globally, crude oil prices dipped to a nine-month low due to a weakening world economy. Meanwhile, BTC is around 57.6K and ETH is around 2.4K, both continuing to show red, signaling bearish trends.

Details

• The ISM Manufacturing PMI rose slightly in August but remained below 50, indicating continued contraction. factory activity. New orders, production, and employment all declined, while input costs increased at a faster pace than expected. These results suggest that the Federal Reserve's interest rate hikes are having a negative impact on the manufacturing sector. 1Y trend: "Side" (ISM)

Crypto

• A poll shows that 50% of cryptocurrency holders intend to vote for Donald Trump, while only 38% favor Kamala Harris. Among non-crypto voters, Harris leads with 53% compared to Trump’s 41%. The survey indicates that 15% of voters own cryptocurrencies or NFTs, with a notable representation of young and racial minority groups among these users. Thus, significant political preferences vary between cryptocurrency holders and non-holders. (source)

World Markets

• The Brazilian economy grew faster than expected in the second quarter, driven by increased consumer spending and government investment. However, net exports were a drag on growth due to higher imports and lower commodity prices. This stronger-than-expected performance may support the case for a rate hike by the Brazilian central bank. 1Y trend: "Up" (Ibge)

Currencies

• The dollar rose slightly as traders weighed economic data. The ISM Manufacturing PMI showed that factory activity continued to contract, raising concerns about the impact of interest rates. Investors are looking for more economic data to inform the Fed's expected rate cut. The dollar gained against the Australian dollar but lost ground against the yen. 1Y trend: "Side"

Commodities

• Crude oil prices plunged to nine-month-low, below 71, driven by weaker-than-expected Chinese economic data and lower oil demand in the U.S. and China. Meanwhile, OPEC signaled plans to increase production in the fourth quarter. 1Y trend: "Side"
• Gold prices dipped below $2,500 as investors awaited economic data to gauge the likelihood of a Fed rate cut. While recent inflation data has tempered expectations for a significant cut, markets still anticipate a total of 100 bps in rate cuts this year. In Europe, the ECB is also expected to lower rates due to slowing inflation. 1Y trend: "Up"

Comment: What's Up With Australia?

For years the Australian Dollar (AUD) keeps within a range of 0.8 to 0.6. Since 1990, the AU200 stocks index has tripled in value and continues to grow slowly after previous fluctuations. The annual GDP growth rate of Australia has been gradually declining since 2008, averaging approximately 2.5%. The unemployment rate stands at 4.2%, which is close to its record low and has decreased consistently from a high of 10% in the 1990s.

Inflation in Australia is at 3.8%, nearing its lowest levels. The Australian Central Bank has stubbornly maintained its interest rate at 4.35%, which is consistent with levels seen in 2010. Business confidence is on the verge of entering negative territory, while historically, it has reached a high of around 18. Consumer confidence in Australia experienced a significant drop in 2022, remaining at around 80 since then.

Overall, the Australian economy is heavily reliant on commodity exports and has a relatively low growth rate. It is significantly affected by the economic conditions of its major export partners, particularly China. As China's economy faces downturns, so does the Australian economy. There has been little progress in diversifying away from this dependency into high-tech sectors over the past 40 years, leading to the same cyclical issues. This situation exemplifies the 'Resource Curse.'

On Wednesday stocks traded mixed but closed slightly in the green, correcting upward after Monday's drop, the sharpest seen since early August. A decline in job openings to a four-year low raised expectations of a larger Fed rate cut. Energy and tech stocks underperformed. Globally, oil prices continue to drop due to fears of a global recession. BTC and ETH were almost unchanged, technically remaining bearish, with 50K and 1.7K as the next targets.

Details

• Job openings declined in July for the first time in two years, falling to the lowest level since 2021. This decrease was primarily driven by fewer openings in healthcare, government, and transportation sectors. While hires and separations remained relatively stable, job quits decreased to a two-year low. 1Y trend: "Down" (BLS)
• Factory orders rebounded strongly in July, increasing by 5% and exceeding expectations. This growth was driven by a surge in durable goods orders, particularly for transportation equipment. However, excluding transportation, orders grew at a much slower pace. 1Y trend: "Down" (Census)
• Despite all "re-shoring" rhetorics the trade deficit widened in July to its highest level in two years. Exports reached a record high, but imports grew even faster, driven by technology goods and intellectual property. The deficits with China and Canada also expanded. 1Y trend: "Down" (BEA)

Crypto

• El Salvador's President Nayib Bukele, a strong supporter of BTC, has acknowledged that his cryptocurrency initiative hasn't gone as intended. In a recent TIME magazine interview, Bukele admitted that "Bitcoin hasn't had the widespread adoption we hoped for". (source)

World Markets

• The Eurozone’s private sector activity strengthened in August for the sixth consecutive month, led by services. However, manufacturing remained weak, and new orders, employment, and business confidence declined. While input costs fell, output prices rose. France and Spain contributed to the overall improvement, while Germany experienced a second consecutive decline. 1Y trend: "Side" (SP)
• The German private sector contracted at a faster pace in August, driven by a sharp decline in manufacturing. New business and exports fell significantly, while job cuts increased. Inflation rose slightly, but cost pressures eased. Business confidence weakened, particularly in manufacturing. 1Y trend: "Down" (SP)

Commodities

• Crude oil prices fell sharply, reaching the lowest level in 10 months (68). Concerns about rising supply, a potential deal to restart Libyan oil production, and weak economic data from China and the US contributed to the decline. 1Y trend: "Side"

Comment: What's Up With Mexico?

The Mexican peso has recently weakened past 19.85 per USD. Over the past 30 years, it has depreciated by 20 times since the 1990s due to active business expansion and government interventions. In contrast, the IPC Mexico Stock Market has grown more than 50 times during the same period.

From 1994 to 2024, Mexico's annual GDP growth rate averaged only 2.07 percent, a disappointing figure given the global economic expansion of that period, which was hampered by numerous bureaucratic barriers.

Meanwhile, the unemployment rate in Mexico rose from 3% to 5% in 2009 but returned to 3% as a phase of vigorous economic growth ended in the mid-2000s. This downturn was influenced by government interventions that rendered businesses less effective in managing their workforce.

Mexico's inflation rate has dramatically declined from 20-30% annually in the 1990s to around 5% today, reflecting tighter control by monetary authorities and increased economic effectiveness. The Bank of Mexico has maintained interest rates at a record 10-11%, which diminishes the local economy's attractiveness for small and medium-sized enterprises (SMEs).

As a result, business confidence in Mexico has remained relatively low, never exceeding 60 for decades, while consumer confidence has also been suppressed throughout much of the 2000s and 2010s.

Overall, Mexico's economic potential—supported by its large population, favorable geography, resource availability, and proximity to the world's largest economy—remains largely untapped due to inadequate governance and significant economic and political mismanagement.

On Thursday, stocks traded mixed as investors anticipated Friday's employment report. Private payrolls data showed weaker-than-expected job growth, but falling unemployment claims provided some optimism. Overall, conflicting economic signals raised concerns about a potential recession and the Fed's monetary policy. Internationally, the Eurozone construction sector continued to contract. BTC and ETH dropped marginally to 56K and 2.4K, reinforcing bearish sentiments.

Details

• Job cuts surged in August, reaching a five-month high. Tech companies led the layoffs, reflecting growing economic uncertainty. This aligns with other indicators suggesting a softening labor market, supporting the case for lower interest rates. 1Y trend: "Up" (CH)
• Initial unemployment claims decreased slightly but remained elevated compared to earlier this year. The decline suggests a marginally improving labor market, but it remains historically tight. Outstanding claims also fell, and the four-week moving average decreased.
• 1Y trend: "Up" (DOL)
• The ISM Services PMI rose slightly in August, surpassing expectations. While new orders and employment showed growth, production slowed, and the backlog of orders decreased. Prices continued to rise at a faster pace, driven by increased costs in various sectors. 1Y trend: "Down" (ISM)

Crypto

• Private Telegram groups are not private anymore. The corresponding statement was removed today from TG FAQ. Telegram generates substantial revenue from cryptocurrency-related activities. Despite an overall loss, the company reported $342.5 million in revenue in 2023, with over 40% stemming from its cryptocurrency wallet and collectible sales. Telegram’s operations are based in the British Virgin Islands. (source)

World Markets

• The Eurozone construction sector continued to contract in August, with new orders falling sharply. This led to a decline in activity, employment, and purchasing. All three segments of the construction sector experienced contractions, with housing and commercial construction seeing the steepest declines. While input prices rose slightly, inflation remained below long-term averages. Despite this, construction companies remain pessimistic about the future. 1Y trend: "Down" (PMI)

On Friday, stocks plunged due to concerns about a weakening labor market and tech sell-off. Major tech companies and chipmakers suffered significant downside. The August jobs report and Fed comments further fueled market anxiety, leading to the worst weekly performance since early 2023. Globally, oil dropped to its yearly lows on global economy slowdown concerns. BTC and ETH were followed stocks preparing to test 50K and 2.0K, correspondingly, again. That is added by Ethereum Fundation starting to selling ETH in unseen earlier volumes.

Details

• The unemployment rate decreased to 4.2% in August from 4.3% in a prior month, matching expectations. The number of unemployed people remained stable, with a slight decrease in temporary layoffs. Long-term unemployment persisted, accounting for over 20% of the unemployed. 1Y trend: "Up" (BLS)

Crypto

• The Ethereum Foundation has substantial ETH reserves ($650 million worth of funds) but has been selling some (1K ETH just today) to fund operations and support the ecosystem (~100M USD yearly). This has caused controversy within the community. Vitalik has also been selling Starknet tokens for similar reasons. (source)

World Markets

• The FAO Food Price Index declined in August, primarily due to lower cereal and sugar prices. Wheat prices fell amid weak demand and increased competition from Black Sea exports. Sugar prices dropped due to improved production prospects. Meat prices also decreased slightly. However, vegetable oil prices rose due to higher palm oil costs. Dairy prices increased due to strong import demand and limited supplies. 1Y trend: "Side" (FAO)

Commodities

• WTI crude oil prices fell sharply this week due to OPEC+ delaying production increases, weak economic data in China and the U.S., and potential supply increases from Libya. However, a significant drop in U.S. oil inventories provided some support. Overall, oil prices experienced their worst weekly decline in months. 1Y trend: "Side"

On Week 37, global investors will be closely watching local inflation data as well as that from Euro Area, China, Mexico, Brazil, Russia, and India. Other important releases include ECB interest rate decision as well as trade data, consumer confidence surveys, GDP growth, and unemployment rates in various countries.

SVET Markets Weekly Update (August 26 - 30, 2024)

On Week 35, stock markets started to show signs of a slowing uptrend. The Fed's favored inflation indicator, Core PCE prices, increased at a lower speed. Globally, the dollar weakened to a 13-month low after Powell hinted at rate cuts. Gold hit a new record high as investors bet on Fed monetary easing. In the crypto markets, BTC and ETH were stuck in their month-old ranges of around 60K and 2.5K as political uncertainties continued to haunt investors. Additionally, the arrest of Telegram CEO Pavel Durov in France has sparked a worldwide discussion on digital rights.

On Monday, stocks were mixed, with the Dow hitting a record high while tech stocks fell. Investors anticipate rate cuts and focus on Nvidia's earnings. Durable goods orders rebounded to a four-year high. Internationally, the dollar hit its yearly lows as gold and oil surged following Powell's dovish comments and ongoing tensions in the Middle East. BTC and ETH declined slightly after hitting their 200-day moving average.

Details

• Manufacturing orders rebounded strongly (+9.9%, the most in 4 years) in July, driven by transportation equipment including defense aircrafts. Overall orders excluding transportation declined slightly. The data challenges recent pessimism about the manufacturing sector. 1Y trend: "Side" (Census)

Crypto

• The arrest of Telegram CEO Pavel Durov in France has sparked a worldwide discussion on digital rights, with some criticizing it as an attack on free speech and privacy. Prominent figures have condemned the action, prompting Macron to deny personal involvement, arguing that the arrest is part of a judicial investigation, not a political decision. (source)

World Markets

• Nigeria's economy grew faster in Q2, driven by increased oil output. Non-oil sectors also grew steadily. However, quarterly GDP was nearly flat due to a sharp decline in the previous quarter. 1Y trend: "Up" (NS)
• The Ifo Business Climate index in Germany fell to its lowest level in six months in August, indicating a worsening economic outlook. Companies are more pessimistic about the current situation and future prospects. 1Y trend: "Side" (IFO)

Currencies

• The dollar weakened to 13-months low after Powell hinted at rate cuts. Markets are now expecting a 25 basis point cut in September. The euro and sterling strengthened against the dollar as central banks in Europe and Japan signaled potential rate hikes. 1Y trend: "Side"

Commodities

• Crude oil prices jumped on Monday due to Middle East tensions and expectations of lower interest rates. Rising tensions in Middle East have raised concerns about oil supply disruptions. The Fed's potential rate cuts have boosted market sentiment, though concerns about weak energy demand persist. 1Y trend: "Side"
• Gold hit a new record high as investors bet on Fed rate cuts. Powell signaled a shift in Fed policy, emphasizing job market risks and inflation decline. Markets are split on the size of the September cut but expect multiple cuts this year. Rising geopolitical tensions also supported gold's safe-haven appeal. 1Y trend: "Up"

On Tuesday stocks traded mixed as Richmond manufacturing reached a four-year low. Tech stocks rose, led by Nvidia, KLA, Adobe, and Teradyne. Globally, the Mexican peso hit a 20-month low as investors worried about the government's reforms. Meanwhile, BTC and ETH dropped sharply to their monthly support levels of 60K and 2.5K, respectively, as rate-cut-induced enthusiasm faded and technicals kicked in due to the absence of support from institutional traders and whales, who remain influenced by political ambivalence.

Details

• The Dallas Fed's service sector index fell in August, indicating a decline in business activity. Employment remained stable, but company outlook and input prices rose. 1Y trend: "Up" (DFed)
• The Richmond District Survey showed a contraction in service sector activity in August. Demand and revenue indexes fell, but future outlook remains positive. Employment remained stagnant, but firms reported wage increases. Firms expect to hire more but struggle to find skilled workers. Price growth is expected to moderate. 1Y trend: "Up" (RFed)
• House prices rose slightly in Q2 but slowed down in June. The West South Central division had the smallest price increase, while the Middle Atlantic division had the largest. Higher mortgage rates and increased home inventory contributed to the slowdown. RFed

Crypto

• BlackRock is launching an Ethereum ETF on the Brazilian stock exchange. This follows the successful launch of their Bitcoin ETF earlier this year. The new ETF will trade under the ticker code ETHA39. This move further solidifies Brazil's position as a leading market for crypto ETFs. (source)

World Markets

• German consumer confidence plummeted in September due to job insecurity, rising bankruptcies, and a weak economy. The post-European Football euphoria has faded, replaced by pessimism about economic prospects. 1Y trend: "Up" (GFK)
• Thai car sales and production continue to decline (-21%), marking the 14th consecutive month of decrease. Tighter financing rules and economic slowdown are blamed. The FTI has lowered its production forecast for 2024. 1Y trend: "Down" (TH)

Currencies

• The Mexican peso is weakening due to political risks and concerns about judicial independence. Proposed constitutional reforms threaten investor sentiment, leading to capital outflows. While new tariffs on Chinese goods may benefit Mexico indirectly, other economic factors like inflation and weak retail sales continue to pressure the peso. 1Y trend: "Down"

Comment: What's Up With Thailand ?

The Thai economy is recovering slowly, despite strengthening local currency (baht) and low inflation, hindered by factors like household debt and a slowdown in Chinese tourism. While exports are improving, the economy is still below pre-pandemic levels. The government's efforts to reduce inflation have helped, but consumer purchasing power remains a concern.

The Thai economy in 2024 is gradually recovering, although growth remains below expectations. The Bank of Thailand has revised its GDP forecasts to 2.4% for 2023 and 3.2% for 2024. However, incorporating the Digital Wallet project could push 2024 growth to 3.8%.

Tourism, previously a major economic driver, is still a concern. In November 2023, Malaysia led in foreign tourist arrivals with 4 million visitors, representing only an 8% increase from pre-pandemic levels in November 2019. This situation is compounded by a 30% decline in Chinese tourist arrivals, attributed to China’s slowing economy, prolonged negative inflation, and an ongoing property crisis that has weakened purchasing power and travel demand. As a result, the number of tourists in 2024 is unlikely to reach the 2019 peak of 39.9 million.

On the exports front, while data from the Trade Policy and Strategy Office indicates that export value contracted by 2.7% year-on-year in the first ten months of 2023, a recovery in the electronics sector is showing promise. Electronic appliances make up the largest share of Thailand's total exports, with overall export value in October 2023 growing by 8.0% year-on-year.

However, household debt remains a significant challenge. According to the Bank of Thailand, household debt reached 90.9% of GDP in Q3 2023, totaling 16.2 trillion baht, negatively impacting consumer purchasing power.

In terms of inflation, Thailand recorded a rate of -0.83% in December 2023, the lowest in 34 months and marking three consecutive months of negative inflation. This decline is largely due to government measures that have reduced energy prices and food costs. Nevertheless, many consumers continue to perceive certain products as expensive, largely because last year’s high base prices skew comparisons.

Overall, the economic situation in Thailand prompted many economists to characterize it as a stagflation - the same which might hit the world economy in a nearest future, spearheaded by an absence of growth drivers and gigantic debts accumulated by both households and corporations in a past 30 years of rapid global growth.

On Wednesday, stocks fell on technical factors followed by futures despite Nvidia's strong earnings report. Notable movers included Nordstrom and Ambarella. Investors are now focused on corporate reports from Salesforce, CrowdStrike, HP, and Affirm. Internationally, France's unemployment rate fell sharply in July as a result of the Olympic Games. BTC and ETH struggled to retain their $60K and $2.5K levels due to low demand as the August vacation period kicks in.

Details

• Mortgage applications rose slightly previous week, following a sharp decline. This increase is attributed to lower interest rates. Applications for new home purchases rose, while refinancing applications declined slightly. 1Y trend: "Up" (MBA)
• (Dares)

Crypto

• The Ethereum Foundation's spending is divided between internal (38%) and external initiatives (68%). Most of the budget goes to external projects, including new organizations. This spending has raised questions about the foundation's transparency and alignment with its mission. (source)

World Markets

• France's unemployment rate fell sharply in July, indicating a tight labor market. Unemployment decreased for most age groups, except for those over 50. However, compared to a year ago, unemployment rose slightly. 1Y trend: "Side" (Dares)
• Russia's unemployment rate remained at a record low of 2.4% in July, reflecting a labor force crisis caused by the ongoing war in Ukraine. The number of unemployed people stayed at 1.9 million. 1Y trend: "Down" (RosStat) At the same time, Russia's monthly GDP growth rose to 3.4% in July from 3% in June. This marks the highest growth rate since May 2021. 1Y trend: "Down" EcDev

Currencies

• The Brazilian real weakened as the dollar strengthened on growth signals. Inflation in Brazil rose slightly, fueling expectations for a rate hike. The central bank remains committed to its inflation target despite some improvement in inflation data. 1Y trend: "Up"

Comment: What's Up With Brazil

Brazil's economic trajectory over the past decades serves as a cautionary tale about the limitations of government interventions in stimulating sustainable growth. Despite various attempts at state-led economic policies, particularly during the post-2008 period, Brazil has struggled to achieve consistent long-term economic expansion.

The country's experience highlights the challenges of relying on government-driven growth strategies when fundamental market demand is weak, especially in key sectors like agriculture, which has been affected by fluctuations in Chinese demand. While government interventions, such as increased public spending, subsidies, and protectionist measures, may provide short-term boosts to the economy, they often prove unsustainable in the long run.

These interventions typically lead to temporary growth spurts but eventually face political resistance and contribute to rising inflation. As seen in Brazil's case, once these measures are exhausted or become untenable, the economy tends to revert to its previous state, sometimes even worse off due to accumulated debt and market distortions.

The Brazilian example suggests that lasting economic progress is more likely to come from creating an environment that fosters entrepreneurship and private sector innovation. By reducing bureaucratic barriers, simplifying the tax system, and encouraging market-driven solutions, Brazil could potentially unlock more sustainable growth paths. This approach would allow businesses to adapt more flexibly to changing global demand patterns and technological shifts, rather than relying on government-directed initiatives that may not align with market realities.

On Thursday, stocks closed mixed, with the Dow hitting a new record but the Nasdaq falling slightly, while data showed unexpected GDP growth. Nvidia's stock dropped after its earnings missed high expectations, raising concerns about the AI boom. Globally, the economic outlook in the Eurozone improved slightly. BTC and ETH remained stuck at $60K and $2.5K in the absence of drivers.

Details

• The economy grew faster than initially thought in the second quarter (+3% vs 2.8%), primarily due to increased consumer spending. While imports rose, stronger investment in businesses and housing contributed to the overall growth. 1Y trend: "Down" (BEA)
• Pending home sales in the unexpectedly fell by 5.5% in July, reversing June's gains. This marks the largest decline since April and is 8.5% lower than a year ago. The NAR's Yun attributes this to affordability issues and uncertainty surrounding the upcoming election. 1Y trend: "Side" (NAR)
• Initial unemployment claims decreased slightly, but remain elevated compared to earlier this year. The softening labor market is evident, as shown by the July jobs report and revised nonfarm payroll data. Outstanding claims increased, while the four-week moving average and non-seasonally adjusted monthly claims decreased. 1Y trend: "Up" (DOL)
• The Fed's favored inflation indicator, Core PCE prices, increased at a slower pace in the second quarter compared to the first quarter. This suggests that inflation may be moderating. 1Y trend: "Down" (BEA)

Crypto

• Australia has seen a surge in BTC ATMs (1200), now ranking third worldwide. This growth raises concerns about potential criminal activity like money laundering and scams. Strict local banking rules and a prevalent gambling culture contribute to the increasing demand for BTC ATMs in Australia. (source)

World Markets

• South Africa's annual producer price inflation decreased to 4.2% in July. This was the lowest level in a year, driven by slower cost increases across various sectors, including manufacturing and food. Prices actually fell slightly on a monthly basis. 1Y trend: "Side" (Stat)
• The economic outlook in the Eurozone brightened in August, with the sentiment indicator reaching its highest point in over a year. This was contrary to expectations and brought some relief amid concerns of a continued economic downturn. While some sectors showed improvement, consumer pessimism remained high. 1Y trend: "Side" (EC)

Currencies

• The Brazilian real fell past 5.6 against the dollar as concerns over President Lula's central bank nominee and rising inflation pressures increased. While the nominee has previously supported rate hikes, his close ties with Lula and past calls for lower rates have raised fears of a more lenient approach. The US economy's stronger-than-expected growth also strengthened the dollar. 1Y trend: "Up"

Comment: What's Up With South Africa

South Africa's economic trajectory since the 2000s presents a stark example of resource-driven growth failing to translate into broad-based prosperity. Despite periods of record GDP growth fueled by natural resource extraction, the country has experienced a troubling divergence between economic expansion and employment creation. The initial employment gains up to 2008 proved short-lived, with unemployment subsequently soaring to a staggering 35% and continuing to rise steadily.

This disconnect is further highlighted by the stock market's tenfold increase since 2000 and low inflation rates. Such trends point to a deeply unequal distribution of wealth, where profits from resource extraction are not reinvested into job-creating businesses within the country. Instead, these gains appear to be channeled into stock market speculation and real estate, inflating asset prices without generating meaningful employment opportunities.

The deterioration of South Africa's Business Confidence Index since 2008 underscores the growing unease within the business community. This decline suggests a lack of faith in the country's economic governance and business climate, further hampering job creation and inclusive growth.

These patterns clearly demonstrate the pitfalls of relying on resource extraction without fostering open markets and a conducive business environment. The result is a highly skewed economy where wealth accumulates at the top without trickling down to create jobs and opportunities for the broader population.

South Africa's situation calls for urgent and drastic reforms in governance and economic policy. Without significant changes to promote inclusive growth, diversify the economy, and improve the business climate, the country faces a bleak future. The current trajectory of rising unemployment, if left unchecked, poses serious risks to social stability and long-term economic viability.

On Friday stocks closed August with gains as the PCE price index matched expectations. The Dow reached a new all-time high (ATH). Dell's earnings boosted its stock, while Intel surged on restructuring news. Internationally, the unemployment rate in the Euro Area reached 6.4%, the lowest level since 1995. BTC and ETH continued to significantly underperform the stock market, forming bearish patterns as traders remained ambivalent about both economic and political conditions. Meanwhile, Q2 saw 2.5% increase in venture capital funding for crypto startups.

Details

• The core PCE price index, the Fed's favored inflation indicator, increased 0.2% in July, matching expectations and June's rise. Year-over-year, core PCE inflation was 2.6%, below forecasts, suggesting the Fed may start lowering interest rates soon. 1Y trend: "Side" (BEA)
• The Chicago PMI increased slightly in August, indicating a less severe economic slowdown in the region. While still below expansion levels, it improved from the previous month. New orders, production, and supplier deliveries contributed to the rise, but reductions in backlogs and employment limited the gains. 1Y trend: "Side" (ISM)
• The University of Michigan’s consumer sentiment index increased slightly in August but fell short of forecasts. Consumers’ views on current conditions improved, but their expectations for the future remained unchanged. Inflation expectations declined for the coming year but stabilized for the next five years. 1Y trend: "Up" (SCA)

Crypto

• Trump continues to pursue a crypto-focused agenda. He has been actively courting the cryptocurrency industry, promising regulatory changes. Recently, Trump unveiled his plans to make America a global crypto capital, hinting at a new venture called "World Liberty Financial" launched by his son Eric Trump. (source)
• Blockchain-based protocols wrapped up Q3 2024 with fewer deals but high-value funding and industry optimism. Notable raises include PIP Labs' $80M Series B for its Story Protocol, valuing it at $2.25B, and Andrena's $18M for decentralized wireless internet. Gameplay Galaxy secured $24M for blockchain gaming. New funds targeted Web3 startups, such as Parafi Capital's $120M crypto fund and Open Network Ventures' $40M early-stage TON ecosystem fund. Q2 2024 saw a modest 2.5% increase in venture capital funding for crypto startups to $2.7B. (source)

World Markets

• The Eurozone's inflation rate dropped to 2.2% in August 2024, down from 2.6% in July. This is the lowest rate since 2021. While this is good news for the European Central Bank, inflation remains above its target. Energy prices fell significantly, but inflation for services and food increased. 1Y trend: "Down" (EC)

Currencies

• The Euro weakened against the Dollar, reaching a two-week low of 1.108. This was due to lower-than-expected inflation data in the Eurozone, which increased the likelihood of a European Central Bank interest rate cut in September 12. Inflation rates fell in all major Eurozone economies. 1Y trend: "Up"
• The Euro Area's unemployment rate slightly decreased from 6.5% in June to 6.4% in July. This marks the lowest unemployment rate since the data began in 1995. 1Y trend: "Side" (EC)
• The Chinese yuan has strengthened against the dollar, reaching one-year low of 7.09 driven by corporate demand. Companies are selling dollars to buy yuan, which could accelerate. The yuan's appreciation is also supported by expectations of lower interest rates. 1Y trend: "Side"

Commodities

• Oil prices fell to $73.5 due to OPEC+ plans to increase oil production and weaker-than-expected Chinese demand. Despite recent supply disruptions, OPEC+ is expected to proceed with its planned output hike. Oil inventories are at their lowest since January, but demand remains weak, causing price forecasts to be lowered. 1Y trend: "Side"

On Week 36, some key economic indicators will be released, including, August unemployment rate, ISM Manufacturing PMI, S&P Global Manufacturing PMI Final, Balance of Trade, and JOLTs Job Openings data. Internationally, the Eurozone will release retail sales, Manufacturing PMI, and GDP growth rate. China’s Caixin Services PMI will also be published.

SVET Markets Weekly Update (August 19 - 23, 2024)

On Week 34, data revealed weaker job growth, indicating a cooling labor market. Following Powell's speech at the Jackson Hole, confirmed expectations for an interest rate cut in September and fueled a market rally.

On global markets, the dollar fell to an eight-month low, while gold reached a record high amid geopolitical tensions and economic uncertainty. Oil prices fluctuated due to a deteriorating global economy and rising Middle East tensions. Despite previous cuts, China's central bank kept interest rates unchanged, shifting focus to rate tools for economic stimulation.

In the crypto market, BTC and ETH broke monthly ranges, reaching 64K and 2.7, respectively, driven by optimism about monetary easing and support for Trump from Robert Kennedy.

On Monday, stocks maintained their upward trend, capitalizing on the previous week's gains and adding over $3 trillion in value from this month's lows. The S&P and the Nasdaq marked their eighth consecutive day of gains. Investor optimism is high ahead of a key speech by Powell. Globally, the euro, yen, and British pound are up sharply as the dollar dropped to its eight-month low on renewed hopes for Fed cuts. Gold is at its highs as geopolitics remain tense. Meanwhile, BTC and ETH are stuck under $60K and $2.6K amid political uncertainties.

Crypto

• The Wisconsin Investment Board recently revealed significant investments in BTC ETF in a filing with the SEC. It now holds about $100 million in BlackRock's Bitcoin ETF, increasing its shares from approximately 2.45 million in May to about 2.9 million as of June 30. Notably, it no longer holds shares in the Grayscale Bitcoin Trust, which it had previously invested in. This board manages Wisconsin's public retirement and trust funds, typically focusing on traditional financial assets. (source)

World Markets

• Malaysian economy continues to grow. Malaysia's imports surged 25.4% in July, hitting a record high. Strong domestic demand drove growth across sectors, especially manufacturing and agriculture. Imports from major partners like Chin and the US increased, while those from Saudi Arabia declined. 1Y trend: "Up" (Dosm)
• Thailand's economy grew by 2.3% YoY - faster than expected in Q2, driven by exports and increased government spending. While private consumption slowed due to high costs, industrial output rebounded. The overall outlook is positive, with expected growth between 2.3% and 2.8% for the year, boosted by tourism recovery. 1Y trend: "Side" (Nesdc)



Comment: China's Stasis

China's housing market is in crisis. Home prices are plummeting, and developers are struggling with debt. The government is hesitant to bail them out, fearing overreliance on real estate and attempting to modernize the economy by pushing for tech. This is impacting world's demand for resources, a crucial sector for the global economy.

Currencies

• The dollar is falling to its eight months low, as investors bet on Fed rate cuts. Weak economic data and recession fears are driving the decline. The yen, Aussie, and kiwi are gaining ground against the dollar. Markets await Fed Chair Powell's speech for further clues on interest rates. 1Y trend: "Up"

Commodities

• Gold holds near its record high amid geopolitical tensions and economic uncertainty. Investors seek safe haven as US-Middle East conflict escalates and Ukraine-Russia tensions rise. Market expects Fed rate cuts but awaits Powell's speech for clarity. 1Y trend: "Up"
• Oil market continued to oscillate between deteriorating world's economy and rising Middle East tensions. Prices plunged over 2% as ceasefire talks in Gaza and weak Chinese demand weigh on the market. Secretary of State Blinken is pushing for a ceasefire to ease geopolitical tensions. OPEC and IEA cut demand forecasts, adding pressure to oil prices. 1Y trend: "Up"

Comment: World's Status

Markets are in disarray. Geopolitics is being pushed towards confrontations from all sides. With weakening resistance from the dominant world power, whose internal political struggles overshadow any external policies, the global landscape is increasingly unstable.

Additionally, due to the over-tightening of the Fed, the world’s economy is actively declining, leading to growing unemployment. Exceptions include certain localities in Southeast Asia, like Malaysia and Taiwan, which are benefiting from businesses relocating their activities from China.

The dollar is down, but other currencies are fluctuating as central bankers begin to weaken their policies in response to deteriorating local economies. Overall, we are on the brink of stagflation. Bankers will fear cutting rates enough to boost the economy because of inflation concerns, while entrepreneurs will be reluctant to produce as rates remain high and costs continue to rise, exacerbated by ongoing energy inflation and increased geopolitical tensions.

This situation will persist until a political change occurs, bringing new leaders who embrace a more practical, less ideological approach to politics. In the meantime, the trader's game is volatility.

On Tuesday, stocks fell, after breaking a 20-year record streak of higher highs, as investors await clues from the Fed regarding rate cuts. Tech and consumer stocks led the gains, while energy and materials declined. Internationally, inflation in the Eurozone rose unexpectedly, and gold reached a new ATH as global investors face increased economic and political risks. BTC and ETH remain unchanged, staying within their ranges of $59K-$60K and $2.5K-$2.6K, respectively.

World Markets

• Eurozone inflation rose to 2.6% in July, exceeding expectations. Energy and non-energy industrial goods prices surged, while food inflation eased slightly. Core inflation held steady at 2.9%. France and Germany saw higher inflation compared to Italy. (Eurostat)
• China kept interest rates unchanged, despite earlier cuts. The central bank is shifting focus from quantitative targets to interest rate tools to stimulate the economy. This follows recent comments about avoiding drastic measures. 1Y trend: "Down"

Commodities

• Gold prices hit a new record high as investors anticipate interest rate cuts from major central banks. Slower inflation fuels expectations of Fed rate reductions, while other central banks, including the ECB, BoE, and Riksbank, also signal easing monetary policy. Global economic uncertainties and geopolitical tensions boost gold's safe-haven appeal. 1Y trend: "Up"
• Oil prices steadied after a sharp drop, driven by hopes for a Middle East ceasefire and rising Libyan production. However, concerns about China's economy and potential US interest rate cuts are weighing on prices. 1Y trend: "Up"

On Wednesday stock growth slowed as prices edged toward a key resistance level and investors weighed economic data and expectations for Fed rate cuts. The BLS revised down job growth numbers, adding to concerns about a softer labor market. The Fed is likely to cut rates in September and potentially more this year. Globally, oil dropped to six-month lows due to a weakening economy, while gold reached a new ATH on the growing probability of rate cuts around the world. BTC and ETH attempted to break out of a descending wedge formation but remained constrained at roughly the same monthly levels.

Details

• Recent data shows job growth was weaker than previously reported with 818K fewer jobs added, suggesting a cooling job market. July's job numbers were also disappointing, further indicating a slowdown in the economy. 1Y trend: "Down" (BLS)
• The average interest rate for 30-year fixed-rate mortgages fell to 6.50%, the lowest in over a year. This marks a 32-basis point drop in four weeks and an 81-basis point decline compared to a year ago. 1Y trend: "Down" (MBA)

World Markets

• Argentina's economy shrank in June, with sharp declines in utilities, construction, and manufacturing. Growth slowed in other sectors. This marks the second-worst contraction of the year. 1Y trend: "Down" (Indec)
• Japan's exports rose to a 7-month high in July, driven by cars, machinery, and electronics. Growth accelerated to 10.3%, but missed forecasts. Exports to major markets like China and the US increased, while those to Thailand, Germany, and Russia declined. 1Y trend: "Up" (MOF)

Currencies

• The dollar fell to its lowest point in 2024 after the Fed hinted at a possible rate cut. Weaker US job data and a stronger Euro, Pound, and Yen contributed to the dollar's decline. 1Y trend: "Side"

Commodities

• Oil prices fell as investors reacted to Fed rate cut expectations and weaker-than-expected job growth. Lower oil inventories couldn't offset concerns about China's economy and Middle East tensions. 1Y trend: "Side"
• Gold prices rose as central banks eased monetary policies. The downward revision of nonfarm payrolls reinforced concerns about the US labor market and strengthened the case for aggressive rate cuts. Central banks in Sweden, China, the Eurozone, and the UK have all lowered rates. 1Y trend: "Up"

On Thursday, stocks are down due to a technical correction and anticipation of Powell's speech at the Jackson Hole conference. Tech stocks led the decline, while financials and real estate sectors gained. The market pullback was not deterred by rising jobless claims. Globally, Eurozone manufacturing is slowing as economic activity decreases and inflation rises. Meanwhile, the British pound has reached a one-year high due to its strong local economy, whereas the Indian rupee is at a record low as the country's central bank struggles to support exporters. BTC and ETH have remained unchanged, hovering around their monthly levels of 60K and 2.5K.

Details

• The Chicago Fed National Activity Index (CFNAI) fell in July, indicating economic weakness. Production, sales, and employment all contributed to the decline. However, personal consumption and housing showed signs of strength. 1Y trend: "Side" (CFed)
• Initial jobless claims rose to 232K exceeding expectations. This reinforces the softening labor market trend, supporting expectations for Fed rate cuts. Outstanding claims also increased, while the four-week moving average declined. 1Y trend: "Up" (DOL)
• The business sector continues to grow for the 19th month, but the pace slowed in August. The service sector remains strong, while manufacturing faces challenges. Inflation eased, but input costs remain elevated. 1Y trend: "Up" (SPI)
• The Kansas Fed Composite Index rose to -3 in August from -13 in July, exceeding expectations. This marks an improvement in economic conditions in the region. 1Y trend: "Down" (KFed)

World Markets

• The Eurozone's private sector expanded in August, led by services. Manufacturing continued to decline, though new orders for services increased. Employment growth slowed, and inflation rose. 1Y trend: "Up" (SP)
• Consumer confidence in the Eurozone and EU fell in August, defying expectations. This suggests growing pessimism among consumers despite recent economic improvements. 1Y trend: "Up" (EU)

Currencies

• The dollar index stabilized after four consecutive declines as investors await Fed Chair Powell's speech. The Fed is likely to cut rates in September due to moderating labor market and weaker economic data. The dollar has weakened against major currencies this week. 1Y trend: "Side"
• The Indian rupee fell to near its record low (84) against the dollar in August. The RBI's efforts to support exports and expectations of a weaker US dollar were overshadowed by concerns about inflation and monetary policy. While inflation has eased, the RBI expects it to remain elevated. 1Y trend: "Up"
• The British pound has risen to a 12-month high (1.3) due to stronger-than-expected UK economic data. Manufacturing and services sectors saw growth, boosted by increased spending. The pound's strength is also supported by a weaker dollar as investors anticipate lower interest rates. 1Y trend: "Up"
• The Euro declined as slower wage growth in the Eurozone supported expectations for more ECB rate cuts. Markets now see a high probability of a rate cut in September and further reductions by year-end. Business activity in the Eurozone is mixed, with strong growth in France and a decline in Germany. In the US, the Fed is likely to cut rates in September. 1Y trend: "Side"

Commodities

• Oil prices rebounded after a four-day slump. The recovery was driven by a decline in oil inventories despite concerns about a US economic slowdown and increased oil supply. Traders are watching for clues on US economic policy from the Fed Chair's speech. 1Y trend: "Side"

On Friday, stocks rallied, led by technology and semiconductor stocks, after Powell signaled rate cuts in his Town Hall speech. Traders now anticipate a 70% chance of a 25 basis point rate cut in September. Globally, gold prices rose as the dollar weakened sharply while other major currencies gained value. Meanwhile, BTC and ETH broke through their monthly ranges, reaching 64K and 2.7K, respectively, boosted by traders' enthusiasm about impending monetary easing and Robert Kennedy's announcement of support for Donald Trump.

Details

• During his speech at the Jackson Hole Economic Symposium, Powell indicated that an interest rate cut is likely in the September meeting. He observed a rapid cooling in the labor market due to a weaker July jobs report and revised payroll figures. Powell expressed growing confidence that inflation is nearing the 2% target, suggesting it's time for less restrictive monetary policy. Additionally, recent Fed meeting minutes showed broad agreement among policymakers on the need to lower rates this quarter.
• Building permits fell in July but less than initially estimated. Single-family permits rose slightly, while multi-family permits plummeted. Regional data shows declines in most areas except the Northeast. 1Y trend: "Down" (Census)

Comment:

Only now, Powell seems to be realizing what other economists, including myself, have been trying to tell him for the past two years: that this inflationary curve was driven by disturbances in supply-demand factors and not by disproportionalities on the labor market, which the Fed tried to "remedy" with its misguided hikes.

In this speech, however, Powell acknowledges his mistake, a step in the right direction. But still, he praises the Fed's actions as appropriate, which is laughable.

All of this proves once again that the days of the Fed are numbered. This organization is completely useless, bureaucratic, and incapable of keeping up with not only the latest technologies but also contemporary markets.

Crypto

• Robert F. Kennedy Jr. paused his independent presidential campaign on Friday, announcing his support for Donald Trump, a fellow BTC advocate. Speaking in Phoenix, he thanked his volunteers and hinted at a campaign conclusion but clarified that he would only withdraw his name from the ballot in swing states to avoid aiding Democratic candidate Kamala Harris. Kennedy's campaign has not ended entirely, as he seeks to navigate his path forward in the election. (source)
• Recent data from the decentralized prediction market Polymarket indicates that Donald Trump is ahead of Kamala Harris in 2024 election odds, following Robert Kennedy Jr.'s campaign suspension. Trump has a 51% chance of winning, while Harris's odds have decreased to 48% after she replaced Joe Biden as the Democratic nominee. The market will confirm a "Yes" outcome if Trump wins the election; otherwise, it will resolve to "No." (source)

World Markets

• The Bank of Japan (BoJ) remains committed to raising interest rates if inflation consistently reaches the 2% target, despite global market instability, Governor Kazuo Ueda said in Parliament. He emphasized that the BoJ is monitoring market volatility after its July interest hike. Ueda stated that any changes to monetary easing would depend on economic and price trends. He also noted that fluctuations in the yen could impact inflation forecasts, prompting discussions on potential policy adjustments if significant risks arise. 1Y trend: "Up" (JP)
• Iceland's producer prices rose in July (by 6.2% YoY) at the fastest pace in 7 months. Marine products and metal prices surged, while food and other manufacturing prices slowed. Export prices rose faster than domestic prices. 1Y trend: "Up" (IS)

Currencies

• The dollar weakened below 101 after Fed Chair Powell hinted at rate cuts. Markets are now expecting multiple cuts this year. The yen strengthened as Japan's central bank signaled potential rate hikes. 1Y trend: "Side"

Commodities

• Gold prices surged to near-record highs as the Fed signaled rate cuts. Powell's dovish tone at Jackson Hole fueled expectations for a rate cut in September, 100bps in total this year. Lower interest rates boost demand for gold, which doesn't pay interest. 1Y trend: "Up"
• WTI crude oil futures rose above $74 per barrel, rebounding from a low of $71.9 on August 21 as markets evaluated major suppliers' responses to declining energy demand. Reports of reduced consumption from top fuel consumers, along with a weak S&P PMI indicating lower manufacturing activity in August, fueled concerns. This led markets to speculate that OPEC+ might postpone phasing out output cuts in the fourth quarter, further affecting supply from major oil exporters. 1Y trend: "Side"

On Week 12, investors will be closely watching a number of key economic indicators. Locally, the second estimate of GDP growth, core PCE price index, durable goods orders, and the Dallas Fed manufacturing index will be released. Internationally, the Eurozone economic sentiment, German consumer confidence and inflation, French unemployment claims and inflation, and the Chinese manufacturing PMI will be of interest.

Comment: What's Up?

Investors are swinging from one extreme to another, oscillating between concerns about impending stagflation and excitement over anticipated Fed easing. This shifting sentiment influences how market participants interpret economic data.

As a result, rising unemployment is viewed by traders as either a bullish signal, because it reinforces the narrative of Fed cutting rate soon, or alternatively, as a bearish indication if investors choose to view it as an indicator of a slowing economy.

Currently, there are two distinct groups dominating the markets - long-term investors, who focus on economic fundamentals, and short-term traders, who closely follow the Powell's every word. Both are trading simultaneously with high volumes, leading to heightened volatility that characterizes today's market environment.

That is compounded by the inherent instability in global commodities markets as geopolitical tensions around the world escalate. This is reflected in oil prices, which rise due to heating conflicts in Eastern Europe and the Middle East, or fall suddenly as investors reassess their outlook for slowing economies in China and the EU, anticipating a long-term decline that will impact regions worldwide and lead to downward pressure on oil prices.

At the same time, we have bursts of growth in various regions of the world, driven by local factors. For instance, production is rising in Malaysia and Indonesia due to businesses relocating from China, where CPC policies have done little to stimulate the economy. Similarly, the services sector in the EU has seen an expected boost during the two-week Olympics event.

SVET Markets Weekly Update (August 12 - 16, 2024)

On Week 33, stocks surged, fueled by lower-than-expected producer inflation data and fewer unemployment benefit claims, easing recession worries while maintaining hopes for Fed rate cuts. Meanwhile, BTC and ETH stalled at $60K and $2.7K, respectively, despite the stock market's upswing. In global markets, gold reached an all-time high and oil prices rose due to growing geopolitical tensions.

On Monday stocks wavered, mostly in the red, as investors awaited key economic data. Inflation expectations fell to a record low, while tech stocks outperformed other sectors. Megacap stocks were mixed, with Tesla and Home Depot leading the declines. Internationally, oil rose by approximately 4% due to geopolitical tensions once again. BTC dipped below 60K, while ETH continued to be rejected by the 2.7K sales wall.

Crypto

• Scientists used a supercomputer to simulate how social norms change over time. They found that norms can influence behavior and disappear. The study was conducted by scientists from the RIKEN Center for Computational Science in Japan. "The research shows that cooperative norms are difficult to sustain if the population consists of a single well-mixed community. However, if the population is subdivided into several smaller communities, cooperative norms evolve more easily". As we always have been saying the decentralization is the key to our future. (source)

World Markets

• India's annual inflation rate plunged to 3.54% (the RBI’s target range is 4%) in July, well below forecasts.> This is the lowest in nearly five years, but likely temporary due to base effects. Food prices eased, while fuel costs dropped faster. Overall, consumer prices rose 1.4% from June. 1Y trend: "Down" (MOSPI)
• Turkey's unemployment rate surged to 9.2% in June, the highest in 10 months, as job losses outpaced new hires. Youth unemployment also jumped significantly. 1Y trend: "Down" (TU)

Commodities

• Oil prices surged above 77.5 on supply concerns amid Middle East tensions and positive economic data. OPEC cut demand forecasts and extended production cuts, while the IEA is expected to lower its forecast. 1Y trend: "Up"

On Tuesday, stocks surged, fueled by lower-than-expected producers inflation (PPI) data, raising hopes for larger Fed rate cuts. Tech and consumer stocks led the rally, with notable gains from Nvidia, AMD, Qualcomm, Amazon, Tesla, and Starbucks. Globally, gold is poised to reach an all-time high as tensions in the Middle East heat up once again. BTC and ETH paused at 60K and 2.7K, respectively, as traders expect more bullish macro signals to emerge.

Details

• Small business optimism improved in July but remains below average. Inflation is the top challenge, forcing businesses to raise prices and wages. Despite optimism, economic uncertainty persists, with owners facing rising costs and an unclear future. 1Y trend: "Down" (NFIB)
• Factory gate prices rose slightly in July, driven by higher energy costs, especially gasoline. However, service prices fell due to trade services decline. While overall producer inflation eased, core inflation unexpectedly accelerated, raising concerns about persistent price pressures. 1Y trend: "Side" (BLS)

Crypto

• The presidential race has recently shifted, with Kamala Harris now leading in Polymarket's predictions market, holding a 52% chance of winning supported by over $61 million in bets. This rise follows Joe Biden’s exit, when Harris's chances were only 1%. Her momentum, boosted by Tim Walz as her running mate, has allowed her to surpass Donald Trump, who is at 45%. The total amount wagered on Polymarket is over $575 million, indicating heightened interest in the election. (source)

World Markets

• Eurozone economic sentiment plunged in August, reaching a nine-month low. Analysts are pessimistic about the economy with inflation and economic growth expectations worsening. 1Y trend: "Up" (ZEW)

Currencies

• The Mexican Peso is trading at 19 per USD, close to its December 2022 low, due to a dovish stance from the Bank of Mexico after weak economic data. Consumer confidence dropped to 46.9 in July, and Banxico Governor Rodríguez Ceja supported a recent interest rate cut to 10.75%. Despite inflation at 5.57%, she believes the cut is justified by declining core prices and expects inflation to return to target by late 2025, potentially lowering the Peso's attractiveness. 1Y trend: "Up"
• In August, the Indian rupee hovered near its record low of 84 per USD, as investors evaluated the RBI's monetary policy amid a weakening dollar. The central bank avoided strengthening the rupee to maintain the competitiveness of Indian exports. Despite recent gains in the yen and yuan, the rupee fell due to shifts in Asian currency carry trades. Additionally, India's inflation dropped to a near five-year low in July, mainly due to base effects, but the RBI anticipates higher inflation in the months ahead. 1Y trend: "Up"
• The British pound weakened above $1.28 as stronger-than-expected UK job market data complicated forecasts for more BOE rate cuts. The unemployment rate fell to 4.2%, while wage growth moderated slightly. Despite a drop in wage growth including bonuses to 4.5%, tight labor market conditions may make the BOE cautious about cutting rates further. The dollar weakened as US data increased expectations for a Federal Reserve rate cut in September. 1Y trend: "Up"

Commodities

• European natural gas futures have fallen to about €39 per megawatt-hour, as Russian gas continues to flow through Ukraine, easing recent price increases. Earlier this month, prices had surged to an eight-month high due to geopolitical tensions in the Middle East and Eastern Europe. Now, with a 9% price rise since early August and strong gas inventories, the market is stabilizing, although a risk premium from ongoing tensions in the Middle East still remains. 1Y trend: "Up"
• Gold dipped slightly below $2,470 per ounce, remaining close to record highs due to its safe-haven status amid rising geopolitical tensions from recent military strikes in Israel and Ukraine’s border advancements. Investors await US consumer price data on Wednesday for insights into inflation and the Federal Reserve’s monetary policy. While expectations for a September rate cut are consistent, opinions vary on whether it will be 50 or 25 basis points, impacting the allure of gold as a non-interest-bearing asset. 1Y trend: "Up"

Comment: BTC and ETH positioning

Although stocks are up and the Nasdaq has rebounded, it's still in a bearish trend (wave D). However, unless it's forming a gigantic triple top on monthly graphs, signifying a massive bear market starting in September 2026, it's unlikely that it can drop below 14-15K, even if the current downtrend persists until February 2025. The latter is our base thesis.

Accordingly, we can expect ETH to hit 3.0-3.2K before continuing downward to the 1.4 - 1.2K range reached in February - March 2025. With that, we can also expect higher volatility in the October - November period due to geopolitical reasons. So, the best strategy is to accumulate cash while occasionally staking short-term on high but temporary price recoveries.

On Wednesday, stocks were mostly unchanged after the CPI report met expectations. Tech stocks led gains while utilities lagged. Microsoft, Apple, Nvidia, Amazon, and Meta rose, while Alphabet and Tesla fell. Internationally, steel prices reached an eight-year low due to weak Chinese demand. BTC and ETH continued to trade in a narrowing range around 60K and 2.7K as traders awaited signals from broader markets.

Details

• Inflation cooled to 2.9% YoY for the fourth straight month in July, hitting a two-year low. Prices for shelter, transportation, and apparel fell. However, energy costs rose slightly. Core inflation also declined. 1Y trend: "Down" (BLS)
• 30-year mortgage rates dropped to a five-month low (6.54%). This follows a recent decline in Treasury yields as investors anticipate Fed rate cuts. Jumbo mortgage rates increased slightly, while FHA rates remained unchanged. 1Y trend: "Up" (MB)

Crypto

• The government has transferred $590 million worth of BTC seized from Silk Road to Coinbase. This is part of a larger 203,200 BTC stash valued at $12 billion. Future sales of these government-held Bitcoins could significantly impact the cryptocurrency market. (source)

World Markets

• Eurozone economy grew 0.3% in Q2, matching Q1. France, Italy, and Spain led growth, while Germany unexpectedly shrank. Overall, Eurozone expanded 0.6% year-on-year, with expectations for 0.8% growth in 2023. 1Y trend: "Up" (EUROSTAT)
• New Zealand's central bank unexpectedly cut interest rates by 25 bp to 5.25% for the first time in four years. Inflation has slowed down, bringing it back within the target range. This move signals a potential shift towards looser monetary policy. 1Y trend: "Side" (RBNZ)
• Fitch downgraded Ukraine's credit rating to "Restricted Default" due to missed debt payments. The country is seeking debt restructuring amid the war. This downgrade negatively impacts Ukraine's ability to borrow money internationally.

Commodities

• Steel rebar prices plunged to an eight-year low amid weak Chinese demand. The country's struggling real estate sector, coupled with new government regulations, led to a supply glut. To offset falling domestic sales, mills increased exports, further depressing prices. 1Y trend: "Down"

On Thursday, stocks surged, boosted by stronger-than-expected retail sales. Investors are less worried about a recession, despite a sharp drop in manufacturing output. Tech and retail giants like Cisco, Walmart, and Apple led the rally. Globally, oil and gold continued to appreciate due to geopolitical factors. BTC and ETH declined again, driven by technical trends.

Details

• Retail sales surged +1% in July, beating expectations. Car sales led the gains, followed by electronics and appliances. Grocery, home improvement, and personal care items also saw increases. However, sales of miscellaneous items, sporting goods, and clothing declined. 1Y trend: "Side" (CB)
• Jobless claims unexpectedly fell for the second straight week, defying recent labor market slowdown concerns. The decline adds pressure on the Federal Reserve to maintain its hawkish stance on inflation. 1Y trend: "Up" (DOL)
• New York manufacturing activity slightly improved in August. Orders fell, but shipments held steady. Delivery times shortened, and inventories declined. Job market remains weak with fewer hours worked. Input prices rose slowly, while selling prices stayed low. Businesses are optimistic about the future. 1Y trend: "Up" (NY)
• Manufacturing activity in the 3d District contracted sharply in August, according to the Philadelphia Fed index. Shipments, new orders, and employment all slowed significantly. Prices continued to rise, but at a slower pace. Future outlook is bleak, with expectations of a broader decline in the next six months. 1Y trend: "Up" (PH)
• Retail sales surged in July (+1% MoM, +2.7% YoY), beating expectations. Car sales led the gains, followed by electronics and appliances. Grocery, home improvement, and personal care items also saw increases. However, sales of miscellaneous items and sporting goods declined. 1Y trend: "Side" (Census)
• In July, industrial production dropped by 0.6%, the largest decline in six months, reversing June's 0.3% growth and exceeding market expectations of a 0.3% decrease. 1Y trend: "Side" (FED)
• In August , the NAHB/Wells Fargo Housing Market Index in dropped to 39, its lowest point this year, down from a revised 41 in July and below the expected 43. This decline in builder sentiment is attributed to affordability issues, high home prices, and elevated interest rates.(Nahb)

World Markets

• Philippines central bank surprised markets by cutting interest rates by 25 bps to 6.25% despite recent inflation rise. The economy grew faster, but inflation is expected to ease. This move aims to support economic growth. 1Y trend: "Up" (BSP)
• In July, China's industrial production grew by 5.1% YoY, slightly below the expected 5.2% and down from 5.3% in June. This marked the third consecutive month of slowing growth and the lowest rate since March, driven by reduced manufacturing and utility output. Despite the slowdown, 33 of 41 major sectors saw growth, with notable increases in coal, chemicals, and electronics. 1Y trend: "Up" (CS)

Commodities

• Gold prices rose after a dip, boosted by expectations of Fed rate cuts. Lower-than-expected US inflation tempered rate cut hopes, slightly cooling gold's rally. However, geopolitical tensions and gold's safe-haven appeal continue to support prices. 1Y trend: "Up"
• Brent crude oil prices rose, boosted by stronger-than-expected US economic data and easing recession fears. However, gains were limited by unexpected increases in US oil inventories and geopolitical tensions. 1Y trend: "Side"

On Friday, stocks surged, fueled by improved consumer sentiment and a sharp decline in building permits, hinting at a possible Fed rate cut. This momentum set major indexes on track for their best week of the year. It seems investors are less concerned about a recession compared to a week ago. However, this sudden rally may also be attributed to an optimistic segment of traders stepping in to buy "cheaper stocks," lured by technical indicators suggesting they are "oversold." Globally, gold reached a new all-time high, as predicted. Meanwhile, BTC and ETH remain below 60K and 2.7K, respectively, with a rise in anti-crypto Democratic candidate polls cited as one of the reasons.

Details

• Consumer sentiment (Michigan Consumer Sentiment) improved in August, ending a five-month decline. People feel better about their finances and the future economy. Inflation expectations remain steady. 1Y trend: "Down" (ISR)
• In July, building permits dropped by 4% to an annual rate of 1.396M, marking a four-year low and falling short of expectations. Approvals for multi-unit buildings decreased by 12.4% to 408,000, while single-family authorizations fell slightly by 0.1% to 938,000. Permits declined in the Midwest, South, and West, while the Northeast saw a 16.2% increase. 1Y trend: "Side" (Census)

Crypto

• Former President Donald Trump's campaign has appointed co-chairs for his presidential transition team, known for its pro-crypto perspective. The team aims to shape policies supportive of the crypto industry while vetting candidates for key government positions and creating a business-friendly policy agenda. (source)

World Markets

• China's foreign direct investment continued to decline in July (to -29.60%), marking the lowest point since the 2009 financial crisis. This trend contrasts with the historical average and highlights current economic challenges. 1Y trend: "Down" (CN)
• Malaysia's economy surged in Q2, growing 5.9%. All sectors contributed, with services, manufacturing, and agriculture leading the way. Construction boomed while mining slowed. The economy is gaining momentum, but challenges remain. 1Y trend: "Up" (Dosm)

Currencies

• The dollar index fell, nearing a seven-month low. Stronger-than-expected US economic data fueled expectations for a smaller Fed rate cut, but overall bets are on multiple cuts this year. A rebound in the UK and Japanese currencies also pressured the dollar. 1Y trend: "Up"

Commodities

• Gold hits record high above 2.5K amid geopolitical tensions and Fed uncertainty. Housing market weakens as interest rates rise. Investors anticipate multiple Fed rate cuts but debate the pace.

On Week 34, traders' focus will be on the FOMC Minutes, the S&P Global Composite PMI Flash, Existing Home Sales, as well as Fed Chair Powell's speech. Internationally, key manufacturing and resource-producing countries, including Japan and Canada, will publish their inflation and industrial data.

SVET Markets Weekly Update (August 5 - 9, 2024)

On Week 32, stocks and crypto markets plummeted amid recession fears, with the Japanese indexes reaching 1987 lows. However, BTC staged a V-shaped recovery, climbing above 60K after a precipitous drop below 50K. Meanwhile, ETH remained suppressed at 2.5K. In global markets, the dollar and oil declined to seven- and six-month lows, respectively.

On Monday, stocks plunged at opening amid recession fears, despite a stronger-than-expected services sector report. Tech giants led the decline, with Nvidia, Apple, and Microsoft investors suffering heavily. Internationally, all major world markets are in the deep red, with Japanese stocks experiencing the worst one-day drop since 1987 as oil hit six-month lows and the dollar reached its seven-month bottoms. The yen and yuan grossly benefited, while the euro and rupee were undermined. BTC and ETH crashed, reaching 50K and 2K, respectively, as corporate traders panic-sold a broad range of risky assets, faced with the Fed's incompetence and geopolitical instability.

Details

• Services sector unexpectedly rebounded in July, with new orders and business activity picking up. Employment also increased, contradicting recent weak job reports. However, rising prices across various services remain a concern. 1Y trend: "Down" (ISM)
• Business activity grew in July, led by services, but at a slower pace than initially reported. Manufacturing expanded slightly, while new orders and exports dipped. Job growth continued, but cost pressures eased. Business confidence slipped, though future outlook remains positive. 1Y trend: "Up" (SP)

World Markets

• Eurozone producer prices rose sharply (+0.5%) in June, ending seven months of decline. Energy costs surged, driving the overall increase. While yearly inflation remains negative, monthly price growth accelerated across most sectors. 1Y trend: "Side" (EC)
• Eurozone economy slowed in July. Growth was weak, driven mainly by services, but manufacturing contracted sharply. Demand fell, employment stagnated, and business confidence hit a low point. Inflation edged up slightly. Eurozone service sector growth is down. New business orders weakened, especially domestically, while backlogs declined. This led to slower job creation and tempered business confidence. Input costs rose, but price increases were limited by softer demand. 1Y trend: "Side" (PPI)
• Turkey's inflation rate dropped to 61.8% in July, down from 71.6% in June. This is the second consecutive slowdown, with prices falling across most categories. Food, transport, and clothing costs decreased significantly, while core inflation also eased. However, prices rose 3.23% compared to June. 1Y trend: "Up" (source)

Currencies

• The dollar is falling sharply. This has increased expectations of interest rate cuts, especially after a disappointing jobs report. The market is now pricing in a significant rate cut for September. 1Y trend: "Up"
• The Chinese yuan strengthened to almost its 1-years lows (7.13) due to a weaker dollar, driven by concerns over a US recession. This helped offset weak Chinese economic data showing manufacturing contraction and slower service growth. 1Y trend: "Side"
• The Indian rupee hit a record low of 84 to the US dollar in August due to global economic uncertainty. Despite a recent US dollar decline and a conservative budget, the Reserve Bank of India is likely intervening to weaken the rupee and boost exports. This strategy aims to counterbalance the impact of a stronger rupee on Indian goods in international markets. 1Y trend: "Up"
• The Euro is soaring to 1.09 against a weakening dollar as investors bet on Fed rate cuts. While the Eurozone faces inflation challenges, economic growth in Q2 exceeded expectations, led by France, Italy, and Spain. Germany, however, contracted. 1Y trend: "Up"

Commodities

• Oil prices plummeted to a six-month low (72.94) due to recession fears. Despite Middle East tensions, weak US and Chinese economies, and rising unemployment are driving down oil demand, overshadowing geopolitical risks. 1Y trend: "Side"

Comment: Why Is It Inevitable?

1. The current generational cycle makes it impossible to avoid large-scale geopolitical conflict, only to make it less catastrophic. The leader of the initiating party is 71 years old. As large-scale conflicts last approximately 10 years, it must be initiated within the next 4 years;
2. Major, co-evolving points of tension will converge, leading to a systemic readjustment that, under the current over-centralized world governance paradigm, might only be nuclear (re: MAD, Thucydides Trap, Security Dilemma, Realist Theory);
3. The closest point of readjustment meets the major condition: all four involved parties seek a "fast resolution," while sharing a desire to escalate in order to preserve personalized powers and control over revenue centers;
4. One of the participating sides has already announced a minimum deployment yield of approximately 70 Ktn if its conditions are not met. However, this side has also addressed its target audience with a historical example – not one but two deployments in August 1945 – suggesting the yield of future deployment will be around 150-200 Ktn;
5. Estimates of the energy released by the explosion at the Chernobyl nuclear reactor in 1986 vary, but it is generally compared to approximately 0.3 kilotons of TNT (KTn). For reference, the yield of the bombs dropped on Hiroshima and Nagasaki was approximately 15 and 20 Ktn. Therefore, it is very unlikely that the future deployment will be on the ground; it will most probably be either in the air or under the water;
6. Consequently, the prime targets of these two deployments will be electronic communications (EMP), naval ships, or small coastal cities (unlikely);
7. The argument that this deployment is politically damaging for the initiator because it irrevocably damages its political support from key allies is void, as this deployment will be advertised as "horrible but historically precedented and absolutely necessary to prevent the upcoming World War III";
8. The argument that "the reply will be non-nuclear but also terrible" is void because the initiating party doesn't have any critical and vulnerable strategic objects outside its own territory. Additionally, politically, the initiating party has an extremely high population tolerance for catastrophic developments, much higher than that of all their adversaries;
9. Furthermore, the deployment will seal the current geopolitical scenario development trajectory towards confrontation, which is highly desirable to the initiator.

On Tuesday, major stock indexes rebounded but failed to close Monday's gap after steep declines in previous days. Investors celebrated strong earnings from tech and industrial giants like Palantir, Uber, and Caterpillar. Internationally, Japanese stocks also surged, boosting market sentiment. BTC and ETH attempted to recover slightly after their dramatic crash, gaining 2-3%.

Details

• Consumer optimism edged up in August but remains low overall. While views on the next six months improved, confidence in personal finances and government policies dipped. Investor optimism fell, contrasting with rising sentiment among non-investors. 1Y trend: "Side" (Tech)
• Logistics sector continues to expand, driven by transportation recovery. Transport prices surged, outpacing capacity for the third month, signaling a potential end to the freight recession. Warehousing remains strong, but inventory levels are declining as retailers lean out while others build up stock for anticipated demand. 1Y trend: "Up" (LMI)

World Markets

• Eurozone retail sales dropped 0.3% in June compared to the previous year. Sales have been volatile, hitting a peak in 2021 and a record low during the pandemic. (EuroStat)

On Wednesday, stocks went down, reversing yesterday's gains. Investors remain cautious about the economic outlook and company earnings. Tech and consumer stocks led the decline, with Tesla, Airbnb, Super Micro, and Disney posting significant shortfalls. Despite earnings, concerns about its park business dragged Disney down. Meanwhile, internationally, Japan's central bank's pledge to hold rates eased investor worries. BTC and ETH traders continued to follow the stock trades, dragging prices below 55K and 2.4K.

Details

• Mortgage applications jumped 6.9% last week, fueled by a 27bps drop in 30-year mortgage rates to a 15-month low. Refinance applications surged nearly 16%, while purchase applications saw a modest 1% increase. The overall rebound erased the previous two weeks of declines. 1Y trend: "Down" (MB)

Crypto

• In the past month, BTC whales have been buying substantial amounts of the cryptocurrency amid a market decline. Recent on-chain data shows that more than 404,448 BTC, worth around $22.8B, has been transferred to long-term holding addresses. (source)

World Markets

• Japan's 10-year bond yield fell to around 0.86% from 1.1% after Bank of Japan Deputy Governor Shinichi Uchida signaled no immediate rate hike. Rising wages fuel inflation expectations, leading to market bets on two rate hikes this year. Earlier, yield tumbled on recession fears and yen carry trade unwinding, but this selloff seems overdone. 1Y trend: "Up"

Currencies

• The Mexican Peso has weakened, surpassing 19.3, fueled by expectations of a hawkish central bank and a broader emerging market upswing. Despite recent export woes, investors await inflation data and a potential rate cut. While opinions on a rate cut are divided, a general easing trend is expected, supported by anticipated Fed rate cuts. 1Y trend: "Up"
• The Brazilian real strengthened to 5.6 (from a low of 5.75), as positive global risk sentiment and hawkish central bank expectations emerged. July's inflation rate dropped to 4.45%, prompting a year-end 2024 inflation forecast adjustment to 4.12%. President Lula's new appointments may impact monetary policy and spark anticipated rate hikes. Additionally, Brazil's PMI reached its highest growth since June 2022, driven by strong expansion in both the manufacturing and service sectors, reinforcing the case for prolonged higher interest rates. 1Y trend: "Up"
• In July, China’s exports grew by 7.0% YoY, down from 8.6% in June and below the 9.7% forecast. This was the slowest growth since April, with exports totaling 300.56B. Despite this, it marked the fourth consecutive month of rising sales, boosted by global demand. Notable increases were seen in exports to the US (8.1%), Taiwan (23.1%), and the EU (8.0%). For the first seven months of 2024, exports rose 4.0% to 2.07T. 1Y trend: "Up" (CN)

On Thursday, stocks continued to recover, fueled by better-than-expected jobless claims data. Tech and chip stocks led the gains, with Nvidia, Broadcom, and AMD soaring. In global markets, indexes were in the green in the EU, Latin America, and Africa, while most were in the red in Asia. South Africa's manufacturing sector shrank, and Argentina's industrial production plummeted by more than 20%. BTC outperformed ETH, jumping to $60K, while the latter still lingers around $2.5K.

Details

• Jobless claims fell slightly to 230K but remain elevated, suggesting a cooling labor market. While still historically tight, the market has softened from its post-pandemic peak. Continuing claims rose, indicating more people are receiving benefits. 1Y trend: "Up" (DOL)
• 30-year mortgage rates plummeted to a 15-month low (6.47%), driven by recession fears and falling Treasury yields. This sparked renewed interest in homebuying and refinancing, as purchasing power increased and refinance applications surged. 1Y trend: "Side" (Fred)
• Wholesale inventories increased in June, but at a slower pace than in May. Nondurable goods, especially petroleum, drove growth while durable goods, particularly computers, professional equipment, and metals, declined. Overall, inventory growth remains modest compared to the previous year. 1Y trend: "Up

Crypto

• A new policy group proposes a BTC tax-free digital zone to boost the economy. The group aims to make the country a global crypto leader by attracting investors and businesses with tax breaks on BTC trading. This move is seen as a way to secure America's financial future. (source)

World Markets

• The Reserve Bank of India holds interest rates steady at 6.5%, aligning with market expectations. Inflation rose to 5.08% but remains within target. Economic growth forecast unchanged at 7.2% for the year. RBI maintains cautious stance on inflation, revising projections upward for upcoming quarters. 1Y trend: "Side" (RBI)
• South Africa's manufacturing sector is in decline (-5.2% YoY), with production falling sharply for the second consecutive month. Key industries like metals, motor vehicles, and food production are struggling. The overall industrial output also contracted, defying expectations. 1Y trend: "Side" (ZA)
• Mexico's inflation spiked in July to 5.57%, driven by soaring food prices. This is the fifth straight month of acceleration. While core inflation eased, overall prices rose faster than expected. 1Y trend: "Side" (MX)
• Mexico's central bank unexpectedly cuts interest rates to 10.75% despite rising inflation. Economic growth remains weak, but core inflation eases. Peso weakens and bond yields rise amid global economic slowdown. Central bank aims to reach 3% inflation target by 2025. 1Y trend: "Side" (BM)
• Argentina's industrial production plummeted 20.1% in June YoY. This is the sharpest decline since the peak in 2020. Overall, the country's industrial output has been volatile, with highs and lows over the past three decades. 1Y trend: "Down" (AR)

On Friday, stocks rose marginally, with no major economic reports or earnings announcements. Notable movers included Expedia, which surged nearly 9% after strong earnings. Globally, China's inflation increased, driven by Beijing's stimulus efforts, while its vehicle sales fell. BTC reversed its gains slightly after a record surge the previous day, remaining above 60K, while ETH continued to linger around 2.5K.

Crypto

• In a Zoom meeting 20 crypto industry executives - DEM supporters - confronted White House officials regarding the Fed and SEC's stringent regulations. The discussions aimed to shape future crypto policies amid a tough crackdown by the Biden administration. While an adviser to Kamala Harris, was present, she chose to remain silent during the discussion. (source)

World Markets

• Turkey's industrial production plummeted 4.7% in June, marking the third straight decline. Manufacturing led the drop, while mining and energy sectors grew. This contraction is the steepest since early 2023. 1Y trend: "Side" (TSI)
• Italy's annual inflation rose to 1.3% in July, up from 0.8% in June. Prices increased for food, drinks, clothing, and services like restaurants and hotels. However, inflation eased for housing, utilities, and communications. Monthly inflation reached 0.4%. 1Y trend: "Down" (IST)
• Brazil's inflation rose for the third straight month in July, reaching 4.5%. This is near the central bank's target but sparks concerns about rising prices. Housing and transportation costs increased, while food prices eased slightly. 1Y trend: "Side" (IBGE)
• In July, China's vehicle sales fell 5.2% year-on-year to 2.49 million units, a larger decline than the previous month's 2.7%. However, new energy vehicle sales surged by 27%. To address the downturn, the Chinese government announced cash subsidies for vehicle purchases would be doubled to CNY 20,000, retroactive to April. From January to July, vehicle sales rose 4.4%, a slowdown from 7.9% in the same period of 2023, aided by a 31.1% increase in new energy vehicles. 1Y trend: "Up" (CAAM)
• In July, China's inflation rate rose to 0.5% from 0.2% in June, surpassing the expected 0.3% and marking the highest level since February. This increase followed six consecutive months of consumer inflation rise, driven by Beijing's stimulus efforts. Food prices stabilized after a year of declines, while non-food prices continued to rise. Core consumer prices, excluding food and energy, rose by 0.4% year-on-year, the smallest increase in six months. The CPI also saw its first monthly gain since April. 1Y trend: "Side (CST)

Currencies

• The British pound rose to $1.276, but is still set to decline for the fourth consecutive week, its longest losing streak since September. The Bank of England's interest rate cut and potential for further cuts have put pressure on the pound. Weak US economic data and UK unrest have also weighed on the currency, causing market uncertainty and fears of more rate cuts. 1Y trend: "Up"

On Week 33, investor's focus will be on inflation, Fed speeches, and retail trends. Europe releases key economic indicators like GDP and inflation. Asia reports on growth, inflation, and consumer sentiment. Central banks in New Zealand, Philippines, and Norway set interest rates.

SVET Markets Weekly Update (July 29 - August 2, 2024)

On Week 31, the Fed kept interest rates steady at a 23-year high of 5.25%-5.50% for the eighth consecutive meeting, citing progress on inflation but acknowledging ongoing risks. The unemployment rate unexpectedly rose to 4.3% in July, the highest since October 2021.

In the Eurozone, inflation increased to 2.6% in July, driven by surges in energy and goods prices, which offset slower rises in services and food costs. Additionally, Eurozone unemployment ticked up to 6.5% in June, ending a previous downward trend.

In the cryptocurrency market, BTC faced heavy selling pressure after yet another attempt to breach the 70K barrier, following a historic Trump's speech.

On Monday, stocks saw a slight downtick, drown by tech giants ahead of earnings reports. Investors await the Fed's decision on interest rates this week, with hopes for a potential rate cut in September. Despite recent market volatility, some companies reported strong earnings, offering a glimmer of optimism. Internationally, oil dipped despite Middle East tensions, as investors worried about a cooling global economy. BTC and ETH prices are diverging again, with ETH continuing to recover after the previous week's dump, while BTC was sold heavily following yet another attempt to breach the 70K barrier after Trump's historic pro-crypto speech in Nashville.

Details

• Texas manufacturing continued its decline in July, with production, orders, and shipments falling sharply. Despite plunging backlogs, demand remains weak. Wages surged, but employment recovered slightly. Rising raw material costs led to modest price increases. 1Y trend: "Side" (Dfed)

Crypto

• El Salvador has proposed using BTC for trade with Russia to circumvent sanctions. Russia is open to the idea but faces hurdles due to its crypto ban. While El Salvador is a Bitcoin advocate, practical challenges remain for both nations in implementing a crypto-based trade system. (source)

Commodities

• Oil prices dropped sharply on Monday due to weakening demand, primarily from China. Despite rising tensions in the Middle East, which typically supports prices, the overall market sentiment was bearish as concerns about global economic health overshadowed supply fears. 1Y trend: "Up"

On Tuesday, stocks tumbled, led by a sharp decline in chipmakers, erasing early gains. Investors are cautious ahead of the Fed's decision tomorrow. The Nasdaq and S&P suffered significant losses, while the Dow managed to hold its ground. Concerns over the sustainability of the AI boom and disappointing earnings from tech and healthcare giants contributed to the market's weakness. Internationally, the German economy shrank unexpectedly, while steel prices reached a six-year low due to China's manufacturing weakness. BTC and ETH stayed in the red, testing their support levels at 65K and 3.2K, respectively.

Details

• Job openings remained steady in June despite slight declines in manufacturing and government. While hires and separations were little changed, the number of workers quitting jobs hit a new low since 2020. Overall, the job market shows signs of cooling after a prolonged period of tightness. 1Y trend: "Down" (BLS)
• Home prices continue to rise (+6.8% YoY), according to the S&P CoreLogic Case-Shiller index. While growth has slowed from peak levels, prices are still increasing at a faster pace than seen in recent years. New York, San Diego, and Las Vegas led gains, while Portland saw the smallest increase. 1Y trend: "Up" (SP)
• Texas' service sector remained on a negative territory while showing modest improvement in July, with revenue rising and business outlook more optimistic. However, employment declined and remains a concern. While input costs eased, companies reported stable selling prices. Overall, the sector is slowly recovering but still faces challenges. 1Y trend: "Up" (Dallas)

Crypto

• The BTC mining industry is set to reach $20B in the next five years. US companies are challenging Chinese dominance with advanced chip technology. Block and Auradine are leading the charge, investing heavily in new mining equipment. Growing network activity is expected to boost hardware demand, fueling industry expansion. (source)

World Markets

• Germany's economy unexpectedly shrank 0.1% in Q2, continuing a year-long slump. Investment plummeted due to high interest rates, and industrial output remains weak. While a slight recovery is predicted for 2024, growth will be slow and limited due to ongoing economic challenges. 1Y trend: "Side" (Dstat)
• The Eurozone economy grew faster than expected in the second quarter, expanding 0.6% compared to the same period last year. This marks the strongest growth in five quarters. 1Y trend: "Down" (EU)
• Eurozone economic sentiment dipped slightly in July but remains below February's peak. This aligns with the ECB's loosening of monetary policy. Both industry and services sectors reported declining confidence, though consumer pessimism eased. 1Y trend: "Down" (EU)

Commodities

• Steel rebar prices plummeted to a six-year low amid oversupply and weak demand in China. New quality standards and a struggling property market have exacerbated the crisis. Excess supply and deflationary pressures limit government intervention, fueling concerns over economic slowdown. 1Y trend: "Down"

On Wednesday, stocks surged on technicals as the Fed held rates steady but hinted at a possible cut. Chipmakers rallied, with Nvidia and AMD leading the charge. However, Microsoft stumbled amid cloud woes. On global markets, Eurozone inflation unexpectedly jumped while China's manufacturing sector continued to contract. Oil jumped as traders turned back to the Middle East conflict. BTC and ETH slumped further on weak technicals and a lack of whales' support at key resistance levels.

Details

• The Fed kept interest rates unchanged at a 23-year high of 5.25%-5.50% for the 8th consecutive meeting, citing progress on inflation but acknowledging lingering risks. While the economy continues to grow and job gains moderate, the central bank remains cautious about rate cuts, emphasizing the need for sustained inflation decline before considering easing monetary policy. 1Y trend: "Up" (Fed)
• Job growth slowed in July, with only 122K new jobs added, the least in 6th months, missing forecasts. Wage gains also cooled, suggesting inflation pressures may ease. While some sectors added jobs, others shed positions. This follows a recent trend of declining job growth and wage increases. 1Y trend: "Down" (ADP)
• Chicago's economic contraction deepened in July. The Chicago PMI fell for the eighth straight month, indicating continued weakness. Production, new orders, and employment declined sharply, offsetting slight improvements in supplier deliveries. Prices continued to ease. 1Y trend: "Side"
• Pending home sales declined 2.6% YoY in June, a slight improvement from May. While sales have fluctuated historically, the current trend suggests a continued cooling in the housing market. 1Y trend: "Up" (NAR)

Crypto

• Stablecoin market capitalization has surged 2.11% to $164B in July, marking ten consecutive months of growth. This, combined with new developments in the crypto space, has boosted stablecoin dominance to 6.93%. (source)

World Markets

• Eurozone inflation unexpectedly jumped in July to 2.6%, defying forecasts. Energy and goods prices surged, offsetting slower rises in services and food costs. Core inflation held steady, indicating persistent price pressures. Germany and France saw inflation accelerate, while Spain eased. 1Y trend: "Down" (EC)
• China's manufacturing sector contracted for the third straight month in July. New orders, exports, and purchasing activity declined. Factory output grew but at a slower pace. Prices fell, with input costs decreasing and output prices dropping faster. Unemployment remained high, and while business sentiment was positive, it weakened. 1Y trend: "Side" (CN)
• The Bank of Japan has tightened monetary policy by raising interest rates to around 0.25% from the prior range of 0 to 0.1% it set in March and reducing bond purchases. This marks a departure from its ultra-loose stance. While inflation is expected to ease, economic growth forecasts have been downgraded. The central bank aims to gradually normalize its balance sheet. 1Y trend: "Up" (BoJ)
• France's annual inflation edged up slightly in July due to soaring energy costs, especially gas. While services and food prices slowed, manufactured goods prices stalled. Monthly inflation remained steady, driven by transport and accommodation costs. Overall, inflation came in below expectations. 1Y trend: "Down" (Insee)

Currencies

• The dollar index retreated after an initial spike, as traders assessed the Fed's stance. While the central bank held rates steady, it signaled an upcoming rate cut. Powell indicated a potential September cut but stressed the need for more data. The yen strengthened significantly after the Bank of Japan tightened policy.
• The offshore yuan gained ground after recent Chinese government pledges to boost the economy. However, new data shows manufacturing contracted sharply in July, and service sector growth slowed. These conflicting signals highlight China's economic challenges.

Commodities

• Oil prices spiked more than 4% driven by technicals as well as by escalating Middle East tensions and unexpected inventory declines. However, weakening Chinese demand capped gains, as concerns over global economic slowdown persist.

On Thursday, stocks plummeted after economic data signaled weakening manufacturing and rising unemployment. Despite lower labor costs and Fed hints at potential rate cuts, investor concerns about the state of the global economy grew. Market calamities were exacerbated by rising Middle East tensions. Internationally, Eurozone unemployment increased, while the Bank of England cut its interest rate. BTC and ETH are in deep red, preparing to test 60K and 3.0K, as traders were affected by the stock market's rampage.

Details

• Jobless claims unexpectedly jumped to a near-year high, signaling a weakening labor market. The increase bolsters expectations of a Federal Reserve interest rate cut. This comes as continuing claims also rose, indicating a broader trend of job losses. 1Y trend: "Up" (DOL)
• Manufacturing continued its sharp decline in July. The ISM Manufacturing PMI plunged below expectations, marking the 20th contraction in 21 months. New orders and production plummeted, while employment fell for the second straight month. Rising input costs added to the sector's woes. 1Y trend: "Down" (ISM)
• Job cuts declined in July 2024 compared to June, but still exceeded the previous year. The tech industry led layoffs, reflecting industry changes and overhiring. Overall job cuts are down slightly this year compared to last. 1Y trend: "Side" (CH)

Crypto

• Kamala Harris' odds of winning the presidential election on Polymarket have reached a new high, with her chances now at 45%. This comes as her campaign gains momentum. In contrast, Donald Trump's odds have decreased to 53%, marking a drop of 10 percentage points since July 21st. (source)

World Markets

• Eurozone unemployment ticked up to 6.50 percent in June, ending a downward trend. While this is a slight setback from a recent low, it's still far below the crisis-era peak. 1Y trend: "Side" (EC)
• Eurozone manufacturing continues to struggle. July's PMI held steady at a low 45.8, indicating contraction. New orders plummeted, forcing cuts in jobs and production. While input costs rose, factories absorbed the burden instead of raising prices. Overall, the outlook remains bleak. 1Y trend: "Down" (PMI)
• The Bank of England cut its interest rate by a quarter-point to 5%, but remains cautious. While inflation is cooling, the central bank is concerned about persistent price pressures. The decision was closely divided, reflecting the delicate balance between curbing inflation and supporting economic growth. 1Y trend: "Side" (BOE)
• Italy's unemployment rate unexpectedly climbed to 7% in June, defying forecasts. While still historically low, this marks a slowdown in job growth. The number of unemployed increased slightly, offset by a small rise in employment. Youth unemployment remained stubbornly high at 20.5%. 1Y trend: "Down" (Istat)

Commodities

• Gold prices dipped slightly to around 2440 today after recent gains, hovering near record highs. A potential easing of interest rates and escalating Middle East tensions are boosting gold's appeal as a safe haven investment. 1Y trend: "Up"

On Friday, stocks continued to plummet, led by tech. A disappointing jobs report fueled recession fears. Amazon and Intel tanked on earnings misses. On global markets, the dollar dipped to a 4-month bottom, oil touched a 2-month low, and gold hit a new ATH. BTC and ETH are in deep red again, as traders succumb to bearish market sentiment.

Details

• Unemployment unexpectedly jumped to 4.3% in July, the highest since October 2021. This surpasses forecasts and signals potential economic slowdown. Labor force participation slightly increased. 1Y trend: "Up" (BLS)
• U-6 unemployment, which includes discouraged workers, hit 7.8% in July. This broader measure has fluctuated over the years, averaging 10.12%, peaking dramatically to 23% during the pandemic and reaching a low point of 6.5% in late 2022. 1Y trend: "Down" (BLS)
• Factory orders unexpectedly plunged in June, driven by a sharp drop in transportation equipment orders. While some sectors saw growth, the overall decline raises concerns about manufacturing activity and potential economic slowdown. 1Y trend: "Up" (Census)
• Vehicle sales increased to 15.82 million in July, up from 15.18 million in June. This follows a long-term average of 14.8 million since 1976, with sales peaking at 21.71 million in 2001 and plummeting to 8.48 million during the 2020 low. 1Y trend: "Up" (NADA)

Crypto

• NFT market remains subdued. A new CoinGecko survey shows that over half of crypto investors don't anticipate an NFT resurgence. Only 19.4% of respondents expressed optimism. Despite this, gaming and metaverse NFTs are seen as the most promising sector. (source)

World Markets

• Brazil's industrial output unexpectedly surged in June, reversing the previous month's decline. This growth exceeded market forecasts, signaling a potential economic upturn after a period of weakness. 1Y trend: "Up" (IBGE)
• Mexico's unemployment rate ticked up to 2.8% in June, exceeding expectations. While the number of employed rose, so did the number of unemployed, pushing the jobless rate higher than last year. This slight increase signals potential economic softening. 1Y trend: "Down" (Inegi)
• Global food prices dipped slightly in July, first time in 5 months, mainly due to cheaper cereals. However, increases in vegetable oil, meat, and sugar costs offset some of the decline. While wheat harvests improved in North America, production issues in Brazil pushed up sugar prices. Dairy prices remained relatively stable. 1Y trend: "Up"

Currencies

• The dollar index plummeted to 4-months lows of 103.7 after a disappointing jobs report fueled expectations of Federal Reserve rate cuts. The weaker-than-expected labor market data contrasted with a surprise rate hike in Japan, boosting the yen and further pressuring the dollar. 1Y trend: "Up"

Commodities

• Gold hit a record high at 2474 as fears of a recession grew. A weaker-than-expected US jobs report fueled bets on aggressive Fed rate cuts. Economic data and corporate earnings painted a gloomy picture, boosting safe-haven demand for gold amid geopolitical tensions. 1Y trend: "Up"
• Oil prices plummeted 3%, hitting a two-month low. Weak economic data, including US job losses and manufacturing declines, overshadowed Middle East tensions. Iran's potential response to recent attacks adds uncertainty to the market. 1Y trend: "Up"

On Week 32, there will be released service sector and trade data while major companies report earnings. China, Europe, and several emerging markets will unveil inflation, trade, and growth figures. Central banks in Australia, India, and Mexico will set interest rates.

Comment: Back to USSR.

It's both funny and distressing to see how gullible even the most sophisticated investors become under the growing pressure of biased mass-media 'analysts'. The current market drop came as a 'surprise' to them.

When you have politically engaged lawyers sitting in Fed with no practical experience in real markets and trying to run the economy like the USSR Politburo did — by 'decrees' and based on a 'mandate from the people' as well as 'scientific forecasts' done by academicians who have never run a real business — what results do you expect?

Declaring a 'war on inflation' and hiking rates to moon-highs with zero effect on the real sources of inflation, which are purely geopolitical and supply-chains-based, was bound to became a circus. Now, these same individuals are starting to 'worry about rising unemployment':)

Centralized financial systems coupled with USSR-type authoritarian decision-making are the major sources of the world's growing calamities.

SVET Markets Weekly Update (July 22 - 26, 2024)

On Week 30, tech stocks plunged, dragging down major indexes as well as BTC (recovered) and ETH as disappointing earnings from tech giants dashed AI-fueled optimism. Alphabet, Tesla, and Visa led the decline, with concerns over spending, revenue, and economic conditions. Meanwhile, the SEC approved VanEck's Ethereum ETF, and Grayscale launched ETH ETFs on the NYSE.

Globally, oil prices dropped for the fourth consecutive day, hitting a one-month low of under $77 due to progress in Israel-Hamas ceasefire talks and weak gasoline demand. In the Eurozone, the economy stalled in July based on the Composite PMI. Also, in an unexpected move, China's central bank slashed key interest rates to 3.35% in an effort to boost its struggling economy.

On Monday, stocks rebounded from the previous week's downturn, with tech and communication sectors leading the way. Investors are monitoring the political landscape as Biden dropped out and the presidential race heats up. Internationally, China's central bank cut its rate in an attempt to boost the national economy. BTC and ETH fluctuate near their strong resistance levels at 68K and 3.6K.

Details

• The Chicago Fed National Activity Index declined in June, surprising analysts with a positive reading. Production rose but was offset by declines in sales, employment, and consumer spending. However, the index's three-month average improved slightly. 1Y trend: "Down" (CFed)

World Markets

• China's central bank unexpectedly slashed key interest rates (3.35%) to boost its struggling economy. The move comes after recent economic data signaled a slowdown in recovery and aims to stimulate lending and consumption. 1Y trend: "Down"

Currencies

• Dollar held steady after a brief dip, largely unaffected by Biden's withdrawal from the presidential race. It weakened slightly against major currencies, but remains up for the week due to strong economic data. However, with cooling inflation, investors anticipate a Fed rate cut and await key economic reports this week for further direction. 1Y trend: "Up"

Commodities

• Gold prices rebounded, reaching nearly $2,410 per ounce. A weaker dollar and hopes for Fed interest rate cuts boosted the precious metal. However, recent economic data and political developments will influence gold's future direction. 1Y trend: "Up"

On Tuesday, stock market indexes were mostly unchanged despite slowed manufacturing activity and a sharp drop in home sales. Meanwhile, investors await key earnings reports as some companies, including Coca-Cola, Danaher, GE, Philip Morris, and Lockheed Martin, have reported strong results. In contrast, others, such as UPS and GM, impacted by EV delays, slumped due to poor earnings. On the global market, oil prices hit a one-month low amid continuing ceasefire efforts in Gaza, while the Indian rupee fell to an all-time low, undermined by the Bank of China's rate cut. BTC and ETH uncharacteristically decoupled, with the latter supported by the ETH ETF launch, while the former continued to stay in the red, dipping below 66K.

Details

• Manufacturing in the Fifth District (Richmond) continued to worsen in July, reaching the lowest point since May 2020. Shipments, orders, production, investment, and jobs declined, while price pressures eased. Business optimism also faded. 1Y trend: "Down" (FRich)
• Existing home sales dropped sharply in June, marking the fourth straight decline. Prices hit a record high, but inventory rose, shifting the market from seller's to buyer's favor. Homes are taking longer to sell, and buyers are more cautious. 1Y trend: "Down" (Nar)

Crypto

• The SEC gave a green light for VanEck Ethereum ETF as Grayscale Launches ETH ETFs on NYSE. Major players are jockeying for position amid speculation of a price surge. However, concerns linger as large investors shift assets and dormant accounts reactivate, potentially signaling market volatility. (source)

Currencies

• The Indian rupee hit a record low (83.7) in late July, pressured by a weak Asian currency market. While India's budget boosted investor confidence, the Chinese central bank's rate cut limited the RBI's ability to support the rupee. Despite record foreign exchange reserves, the rupee weakened due to increased competition from other Asian economies. 1Y trend: "Up"
• The Mexican peso has weakened beyond 18 due to a slowing economy, with retail sales declining and economic activity indicators showing challenges. Expectations of a rate cut and potential economic reforms have also contributed to the peso's depreciation. The IMF has lowered its growth forecast for Mexico, further pressuring the peso. 1Y trend: "Up"

Commodities

• Oil prices dropped for the fourth day, hitting a one-month low (under 77). This is due to progress in Israel-Hamas ceasefire talks and weak gasoline demand. Crude and gasoline inventories are expected to decline, but OPEC+ is unlikely to change production levels. 1Y trend: "Up"

On Wednesday, tech stocks plunged, dragging down major indexes, as disappointing earnings from tech giants dashed AI-fueled optimism. Alphabet, Tesla, and Visa led the decline, with concerns over spending, revenue, and economic conditions. Meanwhile, manufacturing activity contracted sharply. Internationally, the Eurozone economy stalled while the Indian economy stayed strong, according to the latest PMI report. BTC and ETH went down, with traders stressed by the stock market crash.

Details

• Manufacturing contracted sharply in July. New orders, production, and inventories fell, while employment growth slowed. Input costs surged, but selling prices rose at the slowest pace in a year. Despite business sentiment improving slightly, overall conditions in the sector deteriorated significantly. 1Y trend: "Up" (PMI)
• New home sales dropped in June, marking the lowest point in seven months. High prices and mortgage rates continue to deter buyers. Sales declined in the Northeast and Midwest but increased in the South and West. While home prices and inventory levels have eased compared to last year, the market remains sluggish. 1Y trend: "Down" (Census)

Crypto

• According to unconfirmed reports, senator Cynthia Lummis plans to announce new bill, which would require the Fed to hold some BTC as a strategic reserve asset. (source)

World Markets

• Eurozone economy stalled in July based on Eurozone Composite PMI. Manufacturing contracted, services slowed, and new orders fell. Business confidence dropped, leading to hiring freezes. Inflation rose, but price hikes slowed due to weak demand. Germany and France also reported economic declines. 1Y trend: "Down" (PMI)
• India's economy continued its strong growth in July, with both manufacturing and services expanding rapidly. New orders and exports surged, driving increased production and hiring. However, rising input costs are fueling inflation, forcing businesses to raise prices. (PMI)

On Thursday, stocks rebounded slightly, attempting to recover technically from yesterday's sharp decline, but then mostly went red. Investors continue to shift focus from tech to traditional sectors as doubts about the AI-fueled rally grow. Industrials and banks led the gains. Meanwhile, despite robust economic growth in Q2, recent data showed slowing manufacturing and growing unemployment. Internationally, gold prices tumbled to a two-week low on strong GDP, while French unemployment rose to a two-year high. Overall, all major markets through the Americas, EU, Africa, and Asia traded at their monthly lows after Wall Street initiated major tech sell-offs over the past two days. BTC and ETH continued to decline, reaching 63K and 3.0K, wiping out two weeks of profits.

Details

• Factory orders plummeted in June, defying expectations. Transportation equipment led the decline, with aircraft orders taking a massive hit. While some sectors saw growth, overall manufacturing activity weakened significantly, raising concerns about economic slowdown. 1Y trend: "Down" (Census)
• Economy grew faster than expected in Q2 (+2.8%, above forecasts of 2%), driven by consumer spending and business investment. However, underlying trends are mixed. While consumer spending on goods rebounded, services slowed. Business investment was uneven, with equipment spending up, but intellectual property and structures declining. Housing and trade also weakened. 1Y trend: "Side" (Bea)
• Jobless claims fell slightly to 235K previous week but remain above the 2024 average. While the labor market is still tight, it's showing signs of cooling from post-pandemic highs. This suggests a potential slowdown in economic growth. 1Y trend: "Up" (DOL)
• Core inflation cooled slightly in Q2 but remained stubbornly high at 2.9%, exceeding forecasts. This key metric, closely watched by the Fed, signals persistent price pressures. 1Y trend: "Down" (Bea)
• Economic conditions in Kansas worsened in July. The Kansas Fed Composite Index dropped further into negative territory, indicating a deepening economic contraction. This decline follows a period of volatility with the index reaching both record highs and lows in recent years. 1Y trend: "Down" (KFed)

Crypto

• Tyler Winklevoss, Gemini co-founder, criticized the Biden-Harris administration for its hostility towards cryptocurrency. His outburst came after Kamala Harris declined an invitation to speak at The Bitcoin Conference in Nashville. Winklevoss accused the administration of waging a "war on the crypto industry" and said that her refusal to engage with the industry will not be forgotten, implying that the industry will seek retribution in November elections. (source)

World Markets

• French unemployment rose for the second straight month in June to 2.835M, reaching its highest point since October 2022. This contradicts recent positive job market trends. All age groups saw increases, with the biggest jumps in the core-age and younger populations. 1Y trend: "Down" (Dares)
• Germany's business climate worsened for the third straight month in July. Confidence among businesses across sectors has plummeted. Current conditions and future outlook are both bleak. Ifo president warns of a German economy stuck in crisis. 1Y trend: "Down" (Ifo)
• Ukraine's central bank held its key interest rate steady at 13%, aiming to curb inflation despite rising energy costs. While the economy is growing, the ongoing war and its aftermath pose significant risks. Inflation is expected to peak in the coming months before gradually declining, but the overall economic outlook remains uncertain due to the conflict's duration and intensity. 1Y trend: "Down" (UA)

Commodities

• Gold prices tumbled to a two-week low (2370) on technicals and as stronger-than-expected economic data dampened hopes for swift interest rate cuts. Despite this, market expectations for rate reductions persist, potentially supporting gold later. India's reduced gold import tax could boost physical demand for the precious metal. 1Y trend: "Up"

On Friday, stocks recouped marginally on easing inflation data, boosting hopes for lower interest rates. Major indexes closed slightly higher, led by industrials. However, the week ended negatively for the S&P and Nasdaq. Investors now focus on earnings reports from tech giants next week. In global markets, the yen weakened after the Bank of China cut its rates again. BTC jumped back to 68K with the start of the Nashville Conference, while ETH followed less vigorously, reaching above 3.2K.

Details

• PCE inflation eased slightly to 2.5% from 2.6% in June, meeting expectations. However, underlying inflation (core PCE) accelerated unexpectedly to 2.6% from 2.5%. While overall inflation is cooling, persistent price pressures remain a concern for the Fed. 1Y trend: "Down" (BEA)
• Michigan Consumer sentiment improved slightly in July but remains near an eight-month low. Consumers are more optimistic about the future but less satisfied with current conditions. Inflation expectations eased slightly for the coming year but remain elevated for the long term. 1Y trend: "Up" (SCA)

Crypto

• BlackRock has poured cold water on hopes for altcoin ETFs. The world's largest asset manager says investor demand for cryptocurrencies beyond Bitcoin and Ethereum is minimal. This suggests that ETFs tracking other digital assets like Solana or XRP might be a long shot. (source)

Currencies

• The offshore yuan has declined past 7.25 after recent gains, likely a market correction following aggressive state bank intervention to boost the currency. To further stimulate the economy, China's central bank unexpectedly cut a key interest rate, adding to earlier monetary easing efforts. 1Y trend: "Up"

Commodities

• Copper prices held steady above $4.10 per pound despite a third week of declines. Concerns over China's economy and broader market weakness pressured prices. However, recent Chinese stimulus and positive US economic data offered some support. Long-term optimism for copper demand remains due to green energy trends. 1Y trend: "Up"

On Week 31, we'll will see key data releases including Fed policy, jobs reports, and earnings from tech giants. Globally, central bank decisions, inflation figures, and GDP data will dominate headlines. Manufacturing PMIs from major economies will also be closely watched.

SVET Markets Weekly Update (July 15 - 19, 2024)

On Week 29, Powell highlighted easing inflation pressures and expressed a commitment to sustainable progress towards the 2% target, which contributed to the DJ hitting a new ATH. Meanwhile, the ECB held interest rates steady at 4.25% in July, as expected, noting that inflation is gradually cooling but still above the 2% target. In the crypto markets, we're witnessed a 'BTC Conference Rally', which followed a "Trump Rally".

On Monday, the major market indexes rose, with the DJ hitting a new ATH and small-cap stocks surging. Energy, finance, and industrial sectors outperformed, while utilities, staples, and healthcare lagged. The market reaction was influenced by Powell's statement that the Fed will not wait until inflation reaches 2% and will consider cutting rates while working with 'long and variable lags.' Additionally, an assassination attempt on Trump boosted his election chances and the potential for tax cuts and deregulation. In the global markets, gold reached another ATH amid growing geopolitical instability. BTC surged to $65K on Trump's VP pick, pro-crypto Senator J.D. Vance. It was added by easing Mt. Gox worries and BlackRock's CEO showing BTC support.

Details

• New York manufacturing contracted slightly more than expected in July (index -6.6). Some bright spots: stable orders, rising shipments, faster deliveries. Jobs and investment remain weak, but businesses are hopeful for a future rebound. 1Y trend: "Down" (NYFed)

World Markets

• Euro Area Industrial Production dipped 2.9% in May YoY. On average, it's been at 0.91% since 1991, with a high of 41.4% in April 2021 and a low of -28.4% in April 2020. 1Y trend: "Down" (ES)
• Nigeria's inflation rate soared to 34.19% in June, the highest since 1996, due to the removal of fuel subsidies and a weakening currency. Food prices surged to a record high, driven by increases in bread, potatoes, and fish. Other sectors, such as housing and utilities, also saw significant price hikes. Only clothing and recreation showed slight decreases. The annual core inflation rate reached a record high of 27.40%, with consumer prices rising 2.3% month-on-month. 1Y trend: "Up" (NG)

Currencies

• The Indian rupee weakened to 83.6, near its record low, due to broad Asian currency weakness and the RBI's limited ability to support it. China's weak data and Japan's yen interventions boosted demand for harder currencies, reducing the RBI's room for action. With India's inflation rate above 5%, the RBI is expected to keep interest rates unchanged in upcoming meetings. 1Y trend: "Up"

Commodities

• Gold prices surged to near-record levels above $2,420, following Powell's comments. Powell cited easing inflation pressures and a desire for sustainable progress towards the 2% target. Gold also rose due to concerns over political violence and its impact on market stability, and marked its third consecutive weekly gain amid expectations of a September rate cut. 1Y trend: "Up"

On Tuesday, stocks rose broadly, with the DJ hitting a new ATH. Investors were optimistic about possible Fed rate cuts, disregarding falling retail sales. Industrial stocks like Caterpillar and Boeing led the surge. On global markets, EU stocks are down as traders expected the ECB to diverge from Fed rate policies, while gold set a new price record. BTC and ETH hit resistance at 65K and 3.5K, retreating about 2% after a 2-day 'Trump rally.'

Details

• Retail sales rose 2.3% in June, up from a revised 2.6% increase in May. This brings the average annual growth rate to 4.76%. The data marks an all-time high of 52.5% in April 2021 and a low of -19.9% in April 2020. 1Y trend: "Side" (Census)
• The housing market index fell to 42 in July, its lowest point this year, as builders' sentiment dropped due to expectations of higher interest rates. The decline was driven by lower mortgage demand and reduced business conditions for constructors, who are also planning to cut home prices. Despite this, expected sales in the next six months edged up slightly. 1Y trend: "Side" (Nahb)
• Business inventories rose 0.5% in May, exceeding forecasts, with a 1.6% year-over-year increase. Inventories increased at retailers (0.6%), wholesalers (0.6%), and manufacturers (0.2%). 1Y trend: "Side"

Crypto

• Several top venture capitalists, business leaders, and tech executives, including Tyler and Cameron Winklevoss, have donated $8.75 million to a super PAC supporting Donald Trump's presidential campaign. The list also includes notable figures like Douglas Leone (Sequoia Capital), Joe Lonsdale (Palantir Technologies), and Troy Link (Protein Snacks). Elon Musk has publicly endorsed Trump's re-election campaign and may donate $45 million each month to the PAC. Trump has also announced Ohio Senator JD Vance as his running mate, who is a pro-crypto advocate and owns Bitcoin through Coinbase. (source)

World Markets

• European stocks dipped for 2nd session as investors weighed regional economic worries and ECB holding its rate this week against potential Fed rate cuts. Travel stocks gained, but mining and luxury brands fell on profit concerns. 1Y trend: "Up"
• Eurozone economic sentiment fell in July despite 10 months of gains. This suggests investors are less optimistic about growth, aligning with concerns about the slow recovery. 1Y trend: "Up" (ZEW)
• German economic sentiment plunges to a four-month low (ZEW down to 41.8 in July) due to export slump, French instability, and unclear ECB policy. However, current business conditions show slight improvement. 1Y trend: "Up" (ZEW)
• The IMF updated forecast: global economy +3.2% (2024) and +3.3% (2025, +0.1% from previous); US +2.6% (2024, vs 2.7%); EU (0.9%, 2024, previous 0.8%, including, Germany +0.2%, UK +0.7%); China +5% (vs 4.6%), India +7% (vs 6.8%), Japan +0.7% (vs 0.9%).

Currencies

• The Chinese yuan weakened past 7.27 as disappointing economic indicators, including slower-than-expected growth and a property market downturn, dampened market sentiment. Investors await policy insights from the upcoming Third Plenum leadership conference, which will focus on longer-term economic and social issues. 1Y trend: "Up"

Commodities

• Gold hit a record high above $2,460 per ounce as investors bet on central banks slowing down interest rate hikes due to lower inflation. 1Y trend: "Up"

On Wednesday, stocks tumbled as the tech sector tanked. Chipmakers like Nvidia and AMD plummeted after Trump's comments on China and Taiwan. However, the Dow, less reliant on tech, rose to a new high, buoyed by healthcare stocks. Internationally, EU inflation fell. BTC and ETH fluctuated around 65K and 3.5K.

Details

• Manufacturing Production increased 1.10 percent in June of 2024 over the same month in the previous year. Manufacturing Production in the United States averaged 3.57 percent from 1920 until 2024, reaching an all time high of 67.90 percent in July of 1933 and a record low of -39.40 percent in February of 1946. (Fed)
• Building permits rose 3.4% in June to a seasonally adjusted annual rate of 1.446 million, exceeding expectations. The number of permits for buildings with five or more units jumped 19.2% to 460,000. Meanwhile, single-family home permits decreased 2.3% to 934,000. Gains were seen in the Midwest (15.6%) and South (2.8%), while other regions saw declines. (Census)

World Markets

• Eurozone inflation fell to 2.5% in June (down from 2.6% in May). This is still below the long-term average (2.23%) but higher than recent lows. 1Y trend: "Down" (source)



On Thursday, the stock market took a sharp downturn, with the DJ ending a week-long rally in a steep correction. Tech stocks led the decline. However, investors continued shifting money from high-flying tech companies to sectors expected to benefit from lower interest rates, especially small-cap stocks. Globally, the ECB held interest rates at 4.25% as Xi Jinping announced a plan to double the Chinese economy by 2035 through innovations. Meanwhile, BTC and ETH continued to consolidate in their narrowing zone of 64K-65K and 3.4K-3.5K due to traders' uncertainty.

Details

• Jobless claims unexpectedly jumped to 243K, signaling a weakening labor market. This increase, combined with other data, suggests the Fed might cut interest rates in September. 1Y trend: "Up" (DOL)
• Philadelphia manufacturing surged in July, beating expectations. Orders, shipments, and hiring improved significantly. However, both input and output prices rose. Businesses are optimistic about the next six months. 1Y trend: "Up" (Phil)



World Markets

• The ECB held interest rates steady in July at 4.25%, as expected. Inflation is slowly cooling but remains above the 2% target. The ECB will keep rates high to fight inflation, but is ready to adjust if needed based on economic data. 1Y trend: "Up" (ECB)
• Eurozone construction dropped 2.4% in May compared to the previous year. Overall, construction in the Eurozone has been unstable, with a record high in 2021 and a record low in 2020. 1Y trend: "Down" (Estat)



Currencies

• The Chinese yuan weakened past 7.28 as investors waited for economic plans from China's leadership meeting. On the Third Plenum Xi Jinping called on the Communist Party to maintain "unwavering faith and commitment" to his strategic agenda and announced that he wants to double Chinese economy by 2035 through boosting innovation, supporting private businesses, and keeping things stable. However, a stronger dollar is also putting pressure on the yuan. 1Y trend: "Up"



On Friday, stocks tumbled, led down by tech. A major IT outage and mixed earnings reports contributed to the decline. The S&P and Nasdaq faced their worst week since April, while the Dow bucked the trend. Investors are shifting towards smaller companies due to potential Fed rate cuts and China trade tensions. On global markets, EU stocks dropped sharply on growing worries about tariffs as oil tumbled due to temporarily easing Middle East tensions. On crypto markets, it looks like we are experiencing the 'BTC Conference Rally.' The conference starts in a week, so BTC and ETH might accelerate during this period and then bounce down on aggressive profit-taking.

Crypto

• Trump criticized El Salvador's president during his RNC speech, accusing him of sending criminals outside of a country. Trump questioned the drop in El Salvador's murder rate and claimed it was due to them exporting their criminals to America, rather than attributing it to successful crime prevention efforts. However, some commentators saying, it might be just a glitch. (source)



World Markets

• European stocks dropped sharply again today, marking a fifth straight day of losses. Tech stocks, especially chipmakers, were hit hard by potential trade restrictions and a global tech outage. ASML and Infineon suffered big losses, while automakers also declined. 1Y trend: "Up"



Currencies

• The Chinese yuan weakened as investors waited for details on the government's economic plans. President Xi Jinping emphasized market-oriented reforms based on "lifting restrictions and implementing effective regulations" and high-quality growth. China aims to double its economy by 2035. However, the yuan is pressured by a strong dollar. 1Y trend: "Up"



Commodities

• Gold prices fell as the dollar strengthened due to positive economic data. However, expectations of interest rate cuts by the Fed are very high (98% chance of the Sept's cut), supporting gold's overall upward trend. 1Y trend: "Up"
• Oil prices dropped sharply to around $80.5 due to a stronger dollar, China's weak economy, and hopes for a Gaza ceasefire. These factors outweighed tightening supply concerns. 1Y trend: "Up"
• Uranium prices are in a correction despite to a growing supply concerns. Russia, a major supplier, is sanctioned, and Kazakhstan, the top producer, increased taxes. Meanwhile, demand is rising as countries like the US, China, and Japan expand nuclear power (20 countries announced plans to triple their nuclear power by; China is building 22 of 58 global reactors). 1Y trend: "Up"
• Lithium prices plummeted to 3-years low due to oversupply. Increased production, government subsidies, and new reserves worsened the glut. Chile plans to double output, adding pressure. Meanwhile, EU and US tariffs on Chinese EVs hurt battery demand, further impacting lithium prices. 1Y trend: "Down"
• Aluminum prices are on 3-moths-low due to oversupply from China. Better weather boosted Chinese production, while weak domestic demand forced manufacturers to export excess aluminum. 1Y trend: "Up"



On Week 30, key growth, inflation, and spending figures, plus earnings from major companies will be released. Europe and Asia publish manufacturing and services data, with Germany adding confidence indices. Central banks in Canada, Turkey, and China make interest rate decisions, while South Africa reports inflation and South Korea releases GDP.




Comment: ...

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SVET Markets Weekly Update (July 8 - 12, 2024)

On Week 28, stocks experienced a sharp decline with the Nasdaq and S&P crashing due to a classic WS move of 'selling the news' after an unexpected drop in the core inflation rate to a three-year low of 3.3% in June. This decline in inflation has amplified calls for an urgent rate cut by the Fed. BTC and ETH saw slight recoveries following Germany's sale of 13K BTC. Meanwhile, prediction markets now estimate a 65% chance that Biden will drop out of the presidential race after a disappointing NATO conference performance, where he addressed Zelinskiy as Putin.

On Monday, the stock market closed with the S&P and Nasdaq setting new records again, while the DJ dropped. Inflation expectations fell for the second month in a row. Internationally, the French elections outcome brought relief to investors, as no party won a majority, reducing concerns over extreme fiscal policies. BTC (56K) and ETH (2.9K) are lingering at levels not seen in more than six months after the massive crash, blamed by different sources on panicking whales, MG's sell-offs, and the German government.

Details

• Consumers expect inflation to fall across most categories in the next year, with one-year expectations down to 3% in June from 3.2% in May. This decrease is accompanied by a rise in expected earnings growth. 1Y trend: "Up" (NFed)



Crypto

• There's a lot of talk about Germany selling BTC (13K sold from 37K BTC in total), but it's a small part of the overall market. Even if they sold everything, it would only account for a fraction of recent trading. In fact, many governments hold BTC, with the US leading the pack with 213K BTC. (source)
• Messari is publicly criticizing the SEC for failing to prevent crypto fraud and argues new technology can provide better oversight. They're cutting ties with the SEC and plan to challenge their authority through lawsuits, media, and lobbying Congress. This aggressive move has been supported by many in the crypto community. (source) .



Commodities

• Steel prices in China plunged to a 7-year low in July on weak economic data. Investors are doubtful that government stimulus will boost demand for steel used in construction. Home sales and building activity are down, and despite hopes for infrastructure spending, the outlook for steel remains grim. This is due to efforts to control housing prices, which could hurt struggling property developers, a major source of steel demand. 1Y trend: "Down"



Comment: On the French "DeadLock"

According to the latest mass-media reports, the French legislative elections, with 577 seats of the 17th National Assembly at stake, which was held on June 7, 2024, resulted in a "deadlock".

The left-wing New Popular Front emerged victorious, securing 182 seats and overshadowing Macron's centrist alliance, which garnered 168 seats, and the far-right National Rally party, which obtained 143 seats

NFP (New Popular Front - a broad left-wing electoral alliance launched on 10 June) secured 182 seats (289 is needed for a majority), 168 seats were passed to Ensemble parties (a liberal political coalition created by Macron), 143 - to RN-supported candidates (Rassemblement National or National Front from 1972 to 2018, far-right party, described as populist and nationalist, headed by Marine Le Pen), and the rest - to smaller parties, including, LR (The Republicans, a liberal conservative party, largely inspired by the tradition of Gaullism).

The fact that no one won a majority of seats in the National Assembly made the main-stream commentators to panic and to cry for "unity" and "capability to govern". Instead, they have to embrace new opportunities which this French "involuntary decentralization" provides.

Hopefully, now, instead of dictating their dear leaders' rush "ordinances" to "stupid masses", some politicians of this over-centralized state will start learning the basics of listening to what 90% of their own population have been telling them over the past 20 years.




On Tuesday, the SP and Nasdaq hit new highs, while the Dow Jones fell after Powell's testimony, despite him reiterating the Fed's plan to stick to reaching a 2% inflation target. Internationally, Mexican inflation unexpectedly jumped to a one-year high. BTC and ETH continued to fluctuate near 58K and 3K levels, with bulls searching for an opening in the bears' defense in hopes of a fast retaliation.

Details

• Small business confidence unexpectedly rose in June, but remains below average. Inflation is the top concern, pushing firms to raise prices and wages. Despite some relief from backlogs, pessimism lingers about the coming months. 1Y trend: "Down" (Nfib)



Crypto

• Flatcoins address the issue of inflation in stablecoins. They maintain purchasing power by tracking the consumer price index, making them resistant to inflation. Coinbase Ventures investor Brian Armstrong sees flatcoins as a necessary update to the financial system, offering a medium of exchange that doesn't suffer from inflation. (source)



World Markets

• Mexico's inflation jumped to a 1-year high of 4.98% in June, exceeding expectations. Food, restaurants, and education costs rose the most. This is likely due to post-election jitters weakening the peso. Core inflation, excluding volatile items, continued a year-long decline. 1Y trend: "Up" (Inegi)



Comment: The Labor of All Countries Unite

As of the June 2024 elections in the UK, the Labour Party achieved a significant victory over the Conservatives. Here are the results in numbers:

- Labour Party: Won 354 seats, a substantial gain from their previous standing, securing a clear majority in Parliament.

- Conservative Party: Secured 197 seats, losing many seats compared to the previous election.

- Liberal Democrats: Maintained a stable presence with 25 seats.

- Scottish National Party (SNP): Held onto 45 seats.

- Other Parties: The remaining seats were distributed among smaller parties and independents.

The voter turnout was approximately 72%, reflecting a high level of public engagement in this pivotal election. These results mark a decisive shift in UK politics, with the Labour Party gaining a strong mandate to implement their policies.

Following the Labour Party's significant victory over the Conservatives in the June 2024 elections, the major outlines of their policies include:

1. Economic Policy:

• Public Investment: Increased investment in public infrastructure, including transportation, housing, and green energy projects.
• Tax Reforms: Introduction of higher taxes on the wealthy and large corporations to fund public services.
• Living Wage: Raising the minimum wage to ensure a living wage for all workers.

2. Healthcare:

• NHS Funding: Significant increases in funding for the National Health Service (NHS) to reduce waiting times and improve services.
• Mental Health: Enhanced focus on mental health services, with more resources allocated for support and treatment.

3. Education:

• Free School Meals: Expansion of free school meals to all primary school children.
• Higher Education: Reforms to make higher education more affordable, including potential reductions in tuition fees and increased support for vocational training.

4. Climate Policy:

• Green New Deal: Comprehensive policies aimed at achieving net-zero emissions by 2050, including investments in renewable energy and green jobs.
• Sustainable Agriculture: Support for sustainable farming practices and reduction of carbon footprint in agriculture.

5. Social Policies:

• Housing: Large-scale public housing projects to address the housing crisis, including measures to ensure affordable rent and home ownership.
• Social Security: Enhancements to the social security system to support vulnerable populations, including increased benefits and support services.

6. Brexit and Foreign Policy:

• EU Relations: Strengthening ties with the European Union and exploring opportunities for closer cooperation in trade, security, and environmental policies.
• Human Rights: Emphasis on promoting human rights and democratic values in international relations.

7. Labour Rights:

• Worker Protections: Stronger protections for workers, including enhanced rights for gig economy workers and stricter regulations on zero-hour contracts.
• Trade Unions: Support for trade unions and collective bargaining to ensure fair wages and working conditions.

These policies reflect the Labour Party's commitment to largely pro-big-government, inflationary measures under the umbrella of focusing on social justice and human rights.

FYI: The British Parliament consists of two houses: the House of Commons and the House of Lords. The House of Commons has 650 seats, each representing a geographical area of the UK known as a constituency. The House of Lords does not have a fixed number of seats, as it is comprised of appointed life peers, bishops, and hereditary peers, with its membership varying over time.




On Wednesday, stock markets soared to new records, with the S&P topping 5600 for the first time, fueled by big tech and traders' positive perceptions of Powell's congressional testimony. Internationally, Brazil's inflation rose for the second month. BTC and ETH stayed at 60K and 3K respectively, still suppressed by negative sentiments despite being technically oversold.

Details

• Average interest rates for 30-year fixed mortgages dipped slightly to 7% for FHA loans in the week ending July 5th. Jumbo loan rates edged up a bit. 1Y trend: "Up" (source)



Crypto

• Goldman Sachs is launching three projects by year-end to turn real-world investments into digital tokens. This caters to client demand and could revolutionize investing. The projects target US funds and European debt, aiming for faster transactions and broader investment options. This reflects growing institutional interest in tokenization, similar to BlackRock's successful +500M BUIDL fund. (source)



World Markets

• Brazil's inflation rose to 4.23% in June, exceeding a slight dip in May but staying below forecasts. This two-month rise follows a period of decline. While below the central bank's limit, some policymakers worry rising costs and spending could push inflation higher. Food, transportation, and healthcare saw the biggest increases. 1Y trend: "Down" (Ibge)
• Russia's inflation hit an 16-month high of 8.6% in June, exceeding expectations. This rise is likely due to a combination of supply chain issues and increased consumer spending. Food prices saw the biggest jump at 9.8%. 1Y trend: "Up" (Ros)
• Ukraine's inflation hit a record high in June (4.8%) due to ongoing Russian attacks. This caused significant price increases, especially for housing, utilities, transportation, and healthcare. There was some relief for food prices, however. 1Y trend: "Down"



Currencies

• The British pound jumped to its highest level in four months due to inflation worries. The Bank of England suddenly signaled a delay in rate cuts, even though they've been considering them. It might be explained by the Labors' unexpected assent to power, which promises upcoming inflationary spendings. 1Y trend: "Up"



Comment: To Joe or Not To Joe

Watching two candidates, one as cool as a sea-bass, another as lively as the Tutankhamen mummy, throwing their dry excrements at each other in an empty room on live TV, must have been a turning point for 90 million horrified people.

However, the next day and week, it looked like no one could do much about it. Yes, many were talking loudly, as usual, but obviously, it was just talking to the wind. Nothing can be changed in that outdated system without fundamentally redesigning the whole layout.

The over-centralized governance mechanism, which forcefully puts the kingly bottom of Mr. President on top of all our heads, doesn't care a bit what we think in the most critical moments of our lives. All that matters is what an "elected" Majesty believes to be "true".

This type of arrangement might barely work under "usual" circumstances, but it becomes a disaster-in-waiting when His Majesty stops realizing that he not only looks like a vampire surprised in his lair by daylight but is also 100% wrong on all accounts, like a rotten squirrel lying on a highway.

Maybe that type of "governance model" was adequate in the nineteenth and early twentieth centuries, when there were no technologies to replace that rudiment of feudalism, but not in the twenty-first century, when literally any instantaneous voting and crowd-decision making application would do better than those two horror-movie apparitions pretending to be living creatures, which we saw on our devices two weeks ago.

So, do not ask what the Government might do for you - ask what you can do to change your Governance Model.




On Thursday, stocks were in deep red with Nasdaq and S&P crashing in a classic WS move of 'selling the news' on an unexpected drop in the core inflation rate, which factually supports mounting public voices, including senatorial ones, for the Fed's urgent rate cut. With that, the Dow surged as traders favored traditional stocks over tech, as concerns rose about tech earnings. In world markets, gold jumped, nearing an ATH as the dollar weakened, following increasingly dovish statements from Powell and growing disarray in the DEM's presidential campaign. BTC and ETH were stopped short in their post-Germany-dump recovery by the abrupt selloffs on the Street.

Details

• Core inflation, excluding fluctuating items like food and energy, dipped to a 3-year low of 3.3% in June, below expectations. While housing costs remain high, price increases for other categories are slowing down. Monthly core inflation also hit a multi-year low, suggesting inflation might be cooling down. (BLS)



Crypto

• Prediction market traders now estimate a 65% chance that Biden will drop out of the presidential race, up from 59% yesterday. This follows his first press conference in months and concerns about his age and cognitive health. His chances of becoming the Democratic nominee have also fallen to 38%, while his chances of winning the presidency have dropped to 10%. (source)



World Markets

• Brazil's retail sales jumped 8.1% in May, exceeding forecasts and reversing a slowdown in April. 1Y trend: "Up" (Ibge)



Commodities

• Gold prices surged past $2,410 per ounce, reaching a new high, as US economic data showed inflation slowing to a one-year low and labor market softening. This strengthened expectations for the Federal Reserve to cut interest rates, with 85% of investors betting on a June cut. The trend is consistent with other major central banks, making gold a more attractive asset. 1Y trend: "Up"



On Friday, stocks recovered on technicals, closing near record highs. Hopes for a rate cut, boosted by the latest economic data, are mixed with fears of significant overbought markets, especially in big tech. The Dow continued to rally, closing above 40000 again. Internationally, Indian industrial production surged unexpectedly. BTC and ETH oscillated near two-month lows as traders remain uncertain about economics and politics.

Details

• Core producer prices surged 3% YoY in June, exceeding forecasts and marking the highest jump since April 2023. 1Y trend: "Down" (source)
• Michigan Consumer confidence dropped again in July, hitting a 7-month low of 66. This is the fourth month in a row of decline. People are worried about inflation and the upcoming election. Even expectations for future inflation are down slightly. 1Y trend: "Up" (SCA)



Crypto

• Germany sold a big chunk of its BTC (down to 6,894 BTC). El Salvador keeps buying (now at 5,808 BTC) and could soon have more BTC than Germany if Germany keeps selling. (source)



World Markets

• India's industrial production in May exceeded expectations, surging 5.9% YoY. This is the highest growth since October 2023. Manufacturing, especially pharmaceuticals and metals, led the increase. Output also grew in mining and electricity. 1Y trend: "Side" (Mospi)
• Brazilian industrial confidence index (ICEI) falls to 14-month low in July, reflecting pessimism about the economy. 1Y trend: "Side" (source)



Currencies

• The South Korean won weakened to 1.38 due to rising global tensions. South Korea is taking a strong stance against North Korea with new laser weapons and is maintaining high interest rates to fight inflation. However, the central bank might cut rates later this year to align with the Fed. 1Y trend: "Up"



On Week 29, big companies like GS and Netflix report earnings, while the Fed and China's economic data are in focus. Inflation, unemployment, and trade figures will be released globally, with consumer confidence data coming from the UK.




SVET Markets Weekly Update (July 1 - 5, 2024)

On Week 27, stocks reached new highs as unemployment rose to the highest in nearly three years.

Meanwhile, BTC crashed below $54K due to prolonged selloffs by whales amid increasing geopolitical worries, particularly after a significant shift in the UK government where pro-crypto politicians lost their positions following the Labour Party's win. ETH also declined despite positive ETF news.

On world's markets, the French stock market dipped, reflecting broader European trends, as investor caution before key elections overshadowed slightly lower inflation data. Brazil's real weakened, nearing an all-time low, amidst political turmoil despite a robust private sector and labor market. President Lula Da Silva called for prioritizing economic realities over financial demands, criticizing high interest rates.

On Monday, stocks opened the second half of the year. Tech giants led the way, with Tesla surging ~6% and Meta seeing gains despite EU regulatory concerns. The ISM Manufacturing PMI showed a slower contraction in the sector, and traders will monitor key indicators this week to assess the monetary policy outlook. In global markets, EU manufacturing activity worsened, the Brazilian real is reaching record depreciation levels amid the growing feud between Lula and the Central Bank, while crude oil climbed to two-month highs on Middle East geopolitical tensions. BTC and ETH surged to their highest levels in a week, driven by rate cut expectations.

Details

• Manufacturing PMI edged down to 3-month high of 51.6 in June. New orders and production kept growing, but at a slower pace. Employment surged to a 21-month high. Price hikes slowed down, but business sentiment weakened due to soft demand. 1Y trend: "Up" (PMI)



Crypto

• Filipinos can now use USDT, a digital currency pegged to the US dollar, to pay for their social security contributions. This new option applies to the government-run SSS program, which offers financial aid to employees and administers social security and employee compensation benefits. (source)



World Markets

• Eurozone manufacturing activity worsened in June, with production falling at the fastest pace in 2024. Despite a slight upward revision in the PMI to 45.8, it remains below the long-term average. New orders, employment, and purchasing all dropped. Businesses raised prices due to increasing input costs. However, there is a positive outlook for production in the next year. 1Y trend: "Up" (PMI)
• Japan's manufacturing PMI dipped slightly in June but remained in expansion for the second month. Output rose for the first time in a year, but new orders fell due to weak foreign demand. Employment continued to grow, but purchasing activity declined. Price pressures intensified, with both input and output costs rising significantly. Business sentiment improved to its highest point this year. 1Y trend: "Down" (PMI)
• China's factory activity grew faster than expected in June, reaching a two-year high. Production, new orders, and stockpiles increased, but export growth slowed. Employment stabilized and backlogs rose. Input price inflation surged, while factories raised prices for the first time this year. Business optimism declined due to competition and market uncertainty. 1Y trend: "Up" (PMI)
• Indonesia's inflation rate dropped to a 9-month low of 2.51% in June, beating expectations. Food prices led the decline, while transport and furnishings saw some increase. Core inflation also dipped slightly. This keeps inflation within the central bank's target range. 1Y trend: "Side" (BPS)
• India's manufacturing sector grew faster in June than May, fueled by strong demand. Hiring surged to a 19-year high, and companies stockpiled materials. Prices remained elevated, but rose at a slower pace. While manufacturers expect continued growth, their near-term production outlook dipped slightly. 1Y trend: "Up" (PMI)
• Spanish manufacturing grew for a fifth month in June, but at a slower pace than May. This was due to positive demand conditions being outweighed by some uncertainty following European elections. Businesses added staff but reported rising input costs and lower confidence than earlier in 2024. 1Y trend: "Up" (PMI)
• Italy's manufacturing PMI remained in contraction territory in June, though it rose slightly from May. New orders and output fell sharply, but job cuts slowed. Supplier delays eased, but material costs soared. Despite cost pressures, firms lowered prices to stay competitive. A majority of manufacturers expect production to increase in the next year. 1Y trend: "Up" (PMI)
• French manufacturing PMI continued to decline in June, marking 17 months of contraction. New orders, production, and employment all fell. Despite the downturn, manufacturers are cautiously optimistic about future growth, though less so than previously. Prices rose at a record pace due to rising input costs. 1Y trend: "Down" (PMI)
• German manufacturing dipped again in June, despite a small upward revision in the PMI. Production and new orders contracted at a faster pace, and companies continued to reduce stockpiles. Employment also declined as firms completed work faster than they received new orders. Although price pressures eased slightly, the outlook for the sector improved somewhat. 1Y trend: "Up" (PMI)



Currencies

• Brazil's real weakened in July, almost reaching its all-time-low, amid political turmoil and despite a strong private sector and labor market. President Lula Da Silva urged the next leader to prioritize economic realities over financial demands, questioning high interest rates. The central bank defended them as necessary for controlling inflation, while economic indicators show a strong private sector and low unemployment rate, supporting the bank's stance on maintaining high interest rates to manage inflation. 1Y trend: "Up"



Commodities

• WTI crude oil futures rose 2.2% to $83.38 per barrel, its highest level in two months, due to expectations of increased summer demand and concerns about potential supply disruptions from the Middle East conflict between Israel and Iran-backed Hezbollah. Additionally, OPEC+ extended output cuts until 2025, and a hurricane is approaching the Caribbean, potentially impacting oil and gas production. Investors await Fed Chair Powell's comments and upcoming economic data. 1Y trend: "Up"
• Lumber prices dropped to a 14-month low in July due to reduced demand for wood and construction materials. The US housing market is struggling, with pending home sales decreasing 2.1% in May and housing starts plummeting 5.5% to a 3-year low. Building permits also fell 2.8% to their lowest level since June 2020. The housing market faces ongoing challenges due to strict credit conditions. 1Y trend: "Side"



On Tuesday, major stock indexes hit new highs, fueled by gains in big tech despite a slight increase in the JOLTS report and Powell signaling continued high rates. Tesla surged +10% after strong deliveries. In global markets, uranium hit a two-week high as many countries announced their intention to triple their nuclear power by 2050. BTC and ETH dipped again slightly, along with the rest of the crypto market, due to continuing investor uncertainty on rates.

Details

• Job openings unexpectedly jumped in May to 8.1M, exceeding expectations. This reverses a prior downward trend. Job growth occurred in government and manufacturing sectors, while leisure and education saw declines. Regional openings increased in most areas except the South. 1Y trend: "Down" (BLS)
• Economic optimism gained ground in July, reaching a 6-month high of 44.2. This was driven by improvements in consumer outlook for the next 6 months (up 10.6%) and personal finances (up 8.4%). However, the index remains in negative territory overall, extending a 35-month stretch. 1Y trend: "Side" (source)



Crypto

• Crypto VC investments (92) dipped in June compared to May (153), with fewer projects (down 40%) and less money raised ($697M, down 30% from $990M). However, there's a positive twist: both figures are still higher (+42%) than June 2023 (480M). (source)



World Markets

• Eurozone inflation dipped to 2.5% in June, lower than May's 2.6%. This matched expectations. Price increases slowed for food and energy, but core inflation remained unchanged at 2.9%, despite forecasts of a decrease. Inflation varied across countries. 1Y trend: "Down" (Estat)
• Eurozone unemployment hit a record low of 6.4% in May, but the number of unemployed people increased. Spain has the highest rate (11.7%), while Germany has the lowest (3.3%). The rate was 6.5% a year ago. 1Y trend: "Down" (Estat)
• The French stock market (CAC 40) dipped 0.7%, mirroring European trends. Investor caution again ahead of key elections overshadowed slightly lower inflation data. Opponents of France's National Rally (RN) intensified their efforts to prevent the far-right party from gaining power, with more candidates announcing they would withdraw from this weekend's run-off election to avoid dividing the anti-RN vote. 1Y trend: "Up"



Commodities

• Uranium prices hit a two-week high in July at $86 per pound. This rise comes amid a global push for nuclear power, with countries like China building 22 of 58 global reactors, and Japan restarting its reactors program. However, a US ban on Russian imports threatens supply chains. The US and 20 other countries intend to triple their nuclear power by 2050 while assessing their ability to fill the gap without Russia. 1Y trend: "Up"



On Wednesday, stocks rose in a shorter session, with the S&P and Nasdaq hitting new all-time highs as weaker economic data fueled investor belief in an interest rate cut by the Fed. The data showed a slowdown in services and job growth. Tesla continued its strong performance. On global markets, gold is up as the dollar is down. BTC fell to $60K again, possibly due to upcoming repayments by Mt. Gox and whales preparing for geopolitical volatility.

Details

• Job cuts decreased in June compared to May, but were still higher than a year ago. This is the highest June number since 2009 (excluding 2020). Consumer products and tech saw the most cuts. Construction cuts surged in June. 1Y trend: "Up" (CHL)
• Private businesses added 150K jobs in June, lower than expected. Service sectors led growth, while manufacturing and mining declined. Leisure and hospitality hiring surged, preventing a weaker report. The economist noted uneven job growth, and a slowdown in wage increases for those switching jobs. 1Y trend: "Up" (ADP)
• Jobless claims unexpectedly rose to 238K in late June, near a 10-month high. Continuing claims also climbed to 1.86 million, the most since November 2021. 1Y trend: "Up" (DOL)
• Services sector unexpectedly contracted in June, hitting a 4-year low (48.8 PMI). This is worse than forecasts (52.5) and May's reading (53.8). Business activity and new orders also dropped. Survey results show a general slowdown and ongoing job cuts. Inflationary pressures remain, though some price increases have eased. 1Y trend: "Down" (ISM



Crypto

• According to DARPA, governments are taking action focusing on areas where quantum computing might bring benefits, like materials science, but the technology's effectiveness in nonlinear differential equations remains uncertain. (source)



World Markets

• The Eurozone service sector grew for a fifth month in June, but at a slower pace. New business slowed due to weaker export demand, but domestic orders remained strong. Employment growth eased but stayed positive. Price pressures declined but haven't reached pre-pandemic levels. Business confidence improved. 1Y trend: "Up" (PMI)
• The Eurozone economy grew slowly in June, with services barely expanding and manufacturing contracting. New orders fell, and job growth eased. Though price hikes slowed, businesses remained optimistic about future service sector activity. This is a revised reading, up slightly from a preliminary estimate. 1Y trend: "Up" (PMI)
• Russia's unemployment rate reached a record low of 2.6% in May, even though the number of unemployed people went up. This rate was better than expected, but still higher than May 2023's 3.2%. 1Y trend: "Down" (ROS)



Currencies

• Weak economic data, like a shrinking service sector, led investors to believe the Fed might cut interest rates. The dollar weakened as a result. Investors are waiting for clues from the Fed's minutes and jobs data later this week. 1Y trend: "Up"



Commodities

• Gold prices surged to a one-month high, fueled by a weakening dollar and falling Treasury yields. This follows economic data suggesting a slowdown in the US economy and raising expectations of Federal Reserve rate cuts in September. A similar trend is anticipated in other countries like the UK and China. Lower interest rates make holding gold, which doesn't offer interest, more attractive. 1Y trend: "Up"



On Thursday, while the largest stock markets are closed for a national holiday, the UK's index rose as general election polls suggested the Labour Party may secure a majority. In global markets, the Brazilian real strengthened after Lula promised to address fiscal imbalances. BTC dipped below $57K, its lowest in two months. Potential sell-offs by Mt. Gox creditors receiving long-awaited payouts are adding to the whales' sell pressure.

Crypto

• Long-term BTC investors (holding over 155 days) have been cashing in on profits recently, with their Spent Output Profit Ratio (SOPR) metric hitting highs above 10. This surge in profit-taking by these typically resilient holders might have contributed to the recent BTC price drop below $57K. (source)



World Markets

• The UK's FTSE 100 index rose. Meanwhile, the UK's general election was ongoing, with early polls suggesting the Labour Party may secure a majority, ending the Conservative Party's 14-year rule. 1Y trend: "Up"



Currencies

• The Brazilian real strengthened to over 5.5 per USD after President Lula da Silva's meetings with ministers aimed to address fiscal imbalances. The president directed a cut in mandatory expenses and committed to a new fiscal framework, which will aim for balanced public accounts. 1Y trend: "Up"



On Friday, stocks hit new records after June jobs data showed a slowdown. Internationally, gold and silver surged on renewed hopes for rate cuts. BTC continued its descent, dipping below $54K due to whales' protracted selloffs amid increasing geopolitical worries. This was underscored by a fundamental change in the UK government, where almost all pro-crypto politicians lost their jobs overnight following the Labour Party's groundbreaking win. ETH followed despite positive ETF news.

Details

• Unemployment rose to 4.1% in June, the highest in nearly 3 years. This is despite adding 116,000 jobs. More people are entering the workforce (participation rate up to 62.6%), but not finding jobs as quickly. 1Y trend: "Up" (BLS)



Crypto

• Britain's big election shakeup could hurt crypto. The new government's priorities likely won't include crypto, and key industry supporters lost their seats. This means less regulatory clarity and a potentially less crypto-friendly environment. (source)



World Markets

• Eurozone retail sales in May 2024 barely rose (0.3%) compared to last year, a significant slowdown from the historical average growth of 1.07%. This follows record highs in April 2021 and lows in April 2020. 1Y trend: "Up" (source)
• Eurozone construction slumped in June, with PMI hitting a new low (41.8) since mid-2020. Falling orders led to job cuts, lower material purchases, and a cautious outlook for the future. 1Y trend: "Down" (PMI)
• Spain's factory output grew a modest 0.4% in May, below expectations (1.4%). Production rose for consumer goods but fell for energy and capital goods. This follows a weak April (0.2% increase). 1Y trend: "Side" (INE)



Currencies

• The British pound rose to $1.28, its highest level in three weeks, after the Labour party won the parliamentary election, ousting the Conservative party after 14 years. Labour's emphasis on economic stability and strict spending guidelines boosted market confidence, making the pound a "safe haven" asset. Analysts predict a rate cut in August and expect this political shift to benefit British investments. 1Y trend: "Side"



Commodities

• Silver surged towards $31.5 in July, its highest since May, when it reached 11-year's highest, on hopes of a Fed rate cut in September. A weak US jobs report and a slowdown in services pressured the dollar, boosting silver. Expectations of Chinese stimulus and rising solar demand due to record-breaking solar farm connections also fueled the rally. 1Y trend: "Up"



On Week 28, investors watching for inflation data, Fed Chair testimony, and consumer sentiment. Europe holds elections, while several countries announce interest rates and inflation figures. UK releases GDP and retail data. China and India share economic updates.




Comment: The Rise and the Fall Of Moderates

After presidential debates season began on both sides of the Atlantic, it has become increasingly obvious that a middle way, pursued by "moderate" political parties, led by 70-80 year olds, has proved to be absolutely ruinous.

The wave of Resentment threatens now to flatten the economic and social terrain to the level of the 1930s by re-introducing a strict government control over our economic and social lives.

All of this is underlined by rapidly growing geopolitical tensions, which look like a bad replica of 1900th Imperial powers conflicts over resources and global dominance.

It is, of course, doesn't make any sense except that it redirects government powers to the most violent part of the Boomer's ruling class.

We have to lay the blame for that madness at the feet of Moderate Boomer politicians, who in their endless arrogance simply forgot to materially compensate 90% of the population for the emotional trauma and hardships of the world's open economy, where severe competition led to a sharp rise in inequality.

Boomer politicians disregarded a primitive psychological phenomenon, which makes most humans discontent and stressed not because they are hungry or physically threatened but because someone else lives much better than them.

Instead of urgently introducing Universal Basic Income (UBI) and making radical steps by allowing some small but politically dangerous parts of society to go their own ways, even if they want to found their new, independent countries, Boomers continued to force-feed their "unification" agenda to everyone on Earth without any regard to reality on the ground.

Yes, we could have had several small aggressive states led by atrocious regimes. That's bad enough but still tolerable. Instead, now we risk to have the largest economies in the world led by unrestrained ideologues.

The List of Boomer's Blunders:

• Not asserting a seamless transfer of political power to technologically savvy and much more inventive Gen X/Millennials;
• Not initiating a massive social support programs, including UBI, for lower strata of population;
• Not allowing a full economic and political independence to rebellious regions and states;
• Not initiating large political power decentralization reforms, instead over-concentrating power in a few hands.

Here are potential consequences of Boomer's policies:

• A massive surge in anti-capitalist sentiments among Millennials and Gen Z;
• A threat of police-states' re-built in the center of Europe;
• An increased probability of World War III.

It's the price people have to pay because several ruling Boomers didn't even consider the possibility of global decentralization, which, of course, limits greatly their "authorities" but which might have been helping now to avoid a 1930s Resentment.




SVET Markets Weekly Update (June 24 - 28, 2024)

On Week 26, markets reflected a mix of economic and geopolitical concerns. Q1 GDP growth slowed to the lowest since early 2022, PCE inflation dipped and manufacturing activity contracted sharply. Meanwhile, new single-family home sales dropped, as high prices and mortgage rates hinder affordability.

In the crypto market, BTC and ETH plunged as investors continued pulling out funds for the second consecutive week. BTC experienced the most significant outflows at $630M, followed by ETH at $58M.

Internationally, French stocks declined briskly amid rising concerns about the upcoming election, with polls suggesting Le Pen might win but potentially needing a coalition with the lefts. In China, steel prices fell to a two-month low due to a slump in the property market.

On Monday, stocks dipped, with tech leading the decline. Investors are waiting on inflation data and Fed comments this week. Energy stocks rose while Nvidia fell further. Internationally, oil is rising due to geopolitical tensions, the dollar is at a two-month high, and the yen dropped to a 34-year low. BTC price fell below $60K, its lowest in two months, as investors pulled money out of BTC ETFs due to doubts about interest rate cuts. Major sell-offs by the German government and Mt. Gox added to the price decline.

Details

• Texas manufacturing contracted at a slower pace in June. While production ticked up and orders improved, factories utilized less capacity and employment dipped slightly. Despite ongoing price and wage pressures, manufacturers are more optimistic about future activity. 1Y trend: "Side" DFed



Crypto

• Investors are pulling money out of crypto for the second week, totaling $1.2B. BTC saw the most outflows ($630M), ETH ($58M) also faced a downturn. Some altcoins saw inflows (Solana, Litecoin, and Polygon - $2.7M, $1.3M, and $1M), with investors viewing their recent price slump as a buying chance. (source)



World Markets

• German business confidence fell in June, with a surprise drop in the Ifo Business Climate Index. The decline reflects pessimism among companies, particularly in manufacturing and trade. This suggests the German economy is struggling to gain momentum. 1Y trend: "Down" (Ifo)
• Argentina's economy contracted by 5.1% in Q1, its worst performance since 2020. The decline was driven by significant drops in manufacturing, construction, retail, and financial services. However, the agriculture sector rebounded with a 10.2% growth due to an end to a historic drought that affected grain production. On a quarterly basis, GDP fell 2.6%, following a 1.9% decline in the previous quarter. 1Y trend: "Down" (Indec)



Currencies

• The dollar dipped to 105.6 after rising previous week. The strong economy and the Fed's wait-and-see approach on rate cuts are pushing the dollar to near two-month highs. Solid business activity data, particularly in services, is fueling investor concerns about continued Fed's high rates compared to recent easing by other central banks. Now traders are waiting on inflation data and Fed comments to decide if interest rates will be cut. 1Y trend: "Up"
• The Japanese yen weakened near a 34-year low (160 to USD) as the central bank debates raising interest rates. Some want a hike to fight inflation, but others are cautious. The bank will provide a plan to unwind its stimulus program next month. 1Y trend: "Up"



Commodities

• Oil prices rose over 1% to $81.63 per barrel. Strong summer demand, worries about supply disruptions due to Middle East tensions and attacks on refineries, and a potential drop in global oil stocks are driving prices higher. A stronger dollar is limiting gains, but a force majeure declared by Ecuador on oil exports is adding upward pressure. 1Y trend: "Up"
• Steel prices in China hit a two-month low in June (below CNY 3,400 per tonne) due to a slump in the property market. Home sales and prices are down significantly, and government efforts to revive the market are raising doubts due to limited funding. 1Y trend: "Down"



Recommendations:

BTC is at 60K, its strong support zone. ETH is nearing its key resistance levels at 3K. Both can go lower (BTC to 56K, ETH to 2.8K) due to negative sentiment and panic selling as major stock indexes are in the red and geopolitical uncertainties persist.

We can wait until this happens and start buying after these defense levels are breached and lower targets are hit. I think this might be our Plan A.

However, we risk missing the boat by not reacting quickly enough to capitalize on the desired price points. Therefore, we might start accumulating earlier, which means enduring some downsides in our portfolio. This can be painful.

Our objective is to accumulate ETH at an average price of 3K.




On Tuesday, stock market mixed after tech sell-off. S&P and Nasdaq rose, while Dow Jones fell. Tech and communication services led gains, while materials and industrials lagged. Internationally, EU stocks stabilized at their monthly levels after two weeks of volatility. Cryptocurrencies are up, with BTC leading after a rebound of over 2%.

Details

• A Chicago Fed index rose to a 3-month high in May, driven by stronger production. Despite some mixed signals, the overall trend suggests a slight improvement in economic growth. 1Y trend: "Side" (CFed)
• Home prices rose 7.2% YoY in April, but slightly slower than March. San Diego led the gain, while Portland lagged. The national average also rose, hitting a new high despite a slowdown. This mirrors 2023's strong start before a summer cool-down. The market is currently at an all-time high, raising questions about its ability to maintain momentum. 1Y trend: "Up" (SP)
• Manufacturing activity in the Fifth District (Richmond) contracted sharply in June, missing expectations. New orders and shipments fell significantly. Despite lower backlogs, companies cut jobs due to rising wages. However, expectations for future orders and shipments remain positive. 1Y trend: "Up" (RFed)



Crypto

• A major Japanese survey shows that 54% of institutional investors plan to buy crypto in the next 3 years. This is driven by inflation concerns and potential relaxed regulations on crypto investments, though some remain cautious. Bitcoin and Ethereum are seen as the most promising options. (source)
• UK young adults (34%) see crypto as a major voting issue in upcoming elections. A survey by Zumo found they're more interested in crypto than older adults, with many (38% of 18-24 year olds) already invested and seeing it as a long-term financial opportunity. (source)
• Private blockchains (f.e. JPMorgan 's Onyx), used mainly by big banks, handle over $1.5 trillion monthly of secure loan deals (repos, where cash is borrowed against securities, often, Treasuries) in permission-based, under-the-radar repo ledgers. This "under-the-radar" application is proving to be one of blockchain's biggest successes. (source)



World Markets

• European stocks fell. Airbus's profit target cut caused a 10% drop in its share price. However, healthcare stocks rose sharply, with Novo Nordisk and Zealand Pharma surging on positive drug news. 1Y trend: "Up"
• Spain's economy grew faster than expected in Q1, reaching 2.5% YoY. This is an improvement over the previous quarter's 2.1% increase. Domestic factors drove most of the growth, with some contribution from foreign demand. 1Y trend: "Down" (Ine)



On Wednesday, stocks closed slightly higher ahead of an economic report. Amazon and Tesla rose, while Nvidia remained volatile. In global markets, French stocks are down due to Le Pen's projected win, and the Japanese yen depreciated to 1986 levels. BTC and ETH are holding their levels at 61K and 3.3K, respectively, after Monday's plunge and a slight rebound.

Details

• New single-family home sales dropped 11.3% in May, reaching an annualized rate of 619K. High prices and mortgage rates are affecting affordability. Sales fell across all regions, with the Northeast experiencing the largest decline. The median price was $417.4K, lower than last year's $421,200, while the average price was $520,000. There were 481K homes listed for sale, representing a 9.3-month supply. 1Y trend: "Up" (Census)
• Building permits fell 2.8% to 1.399 million in May, the lowest since June 2020. Multi-family permits dropped 5.2% to a 10-year low, while single-family permits decreased 2.1% to a 10-month low. Permits declined in the Northeast and South, but increased in the Midwest and West. The total number of permits was revised higher than initially reported. 1Y trend: "Up" (Census)



Crypto

• NFT trading plunged 45% in Q2 to $4.1B, despite a Q1 rise. Wash trading, where investors inflate prices, is a major concern, making up over half of all NFT transactions. (source)



World Markets

• French stocks (CAC 40) are down as worries rise about the upcoming election. Polls suggest Le Pen might win, but without a majority, forcing a coalition with Macron. 1Y trend: "Up"
• France's unemployment spiked in May, adding 2.8 thousand jobs. The jobless rate is now 2.8 million. This is misleading information though, as the unemployment rate (2.8 million) is the total number of unemployed people, not the increase in unemployment. The monthly increase was 40.9 thousand. 1Y trend: "Down"
• Russia's industrial sector surged 5.3% in May, exceeding forecasts (2.5%) and accelerating from April's growth (3.5%). Manufacturing led the way (9.1%), offsetting a slight decline in mining (-0.3%). 1Y trend: "Up" (RS)



Currencies

• The Euro fell near a two-month low on expectations of more ECB rate cuts and weak economic data from Europe. Investors are also cautious ahead of key inflation reports and the French election, which could cause market swings depending on the outcome. 1Y trend: "Side"
• The Mexican peso is weakening beyond 18.2, nearing a 15-month low. This is due to a stronger dollar and investor wait-and-see approach before Mexico's central bank meeting. Despite high inflation, Mexico's economic activity is supporting the peso somewhat. 1Y trend: "Up"
• The Brazilian real hit a new low (5.5) in June due to high inflation and a strong dollar. Inflation above 4% raised concerns about government spending and its impact on prices. This could prevent the central bank from raising interest rates to fight inflation. Additionally, weaker demand from China and lower commodity prices hurt Brazil's export forecast. 1Y trend: "Up"
• The Indian rupee hit a new low near 83.6 per USD due to a broad weakness in Asian currencies and a stronger dollar. China's weakening economy added pressure. Despite India's strong growth outlook, the RBI couldn't intervene heavily to support the rupee as it risked hurting exports. 1Y trend: "Up"
• The Japanese yen hit a 38-year low against the US dollar, pressured by the Bank of Japan's easy money policy compared to the Federal Reserve. Despite warnings and intervention efforts, the yen continues to weaken, raising concerns for Japan's economy. 1Y trend: "Up"



On Thursday, stocks edged higher, propelled by sluggish economic growth data and lower bond yields on hopes of future rate cuts. The consumer discretionary and communication services sectors led gains, while staples and financials lagged. In global markets, the EU's economic sentiment indicator declined, and steel prices reached a two-month low due to China's construction slowdown. BTC and ETH moved up slightly, while some key coins such as Solana, Polkadot, and Avalanche jumped by more than 8%.

Details

• Q1 GDP grew 1.4% - the lowest growth since the first half of 2022 - with slow consumer spending (1.5%). Investment rose (4.4% non-residential), exports grew faster than expected (1.6%), and imports were revised lower (6.1%). 1Y trend: "Down" (BEA)
• Durable goods orders edged up 0.1% in May, defying expectations of a decline. This four-month growth streak was fueled by strong demand for transportation equipment (up 0.6%) and computers (up 1.3%). However, orders for business investment (excluding aircraft) fell 0.6%, suggesting some caution from companies. 1Y trend: "Side" (Census)
• Jobless claims dipped to 233K (down from 243K), but remain high compared to this year. This suggests a slight easing in the tight labor market, though it's still tougher for unemployed workers to find jobs. 1Y trend: "Up" (DOL)
• Pending Home Sales dropped 6.6% YoY in May, showing a slight improvement from the previous month's decline. This follows a long-term average of a small decrease but remains below the peak in April 2021. 1Y trend: "Up" (NAR)
• Manufacturing activity weakened in June. The Kansas Fed Index dropped to -8, down from -2 in May. This is still above the historic low of -30 in April 2020, but lower than the average of the past few decades. 1Y trend: "Side" (KFed)



Crypto

• Hackers switched targets in Q2 2024, focusing on centralized finance (CeFi) which suffered a massive 984% increase in stolen funds, while DeFi's ones decreased by 25%. (source)



World Markets

• The Euro Area's economic sentiment indicator fell to 95.9 in June, missing forecasts. Businesses across various sectors, including services, industry, retail, and construction, reported worsening sentiment, driven by concerns over demand and inventory levels. Consumer confidence also weakened slightly. However, expectations for selling prices improved in some sectors, including construction and retail. 1Y trend: "Down" (EC)
• The French stock market (CAC 40) is down for a third day (7,531). Inflation worries ahead of key reports and the upcoming France elections continue to weigh on investors, 1Y trend: "Up"
• Spain's retail trade grew 0.2% YoY in May, slower than the 0.3% growth in April. Non-food spending rose 2%, up from 1.1% in April, while food spending decreased 0.6%, following a small increase in April. On a monthly basis, retail sales fell 0.6% in May, after a 0.8% rise in April. 1Y trend: "Side" (INE)



Commodities

• Steel rebar prices in China plunged to a two-month low (CNY 3,360) due to worries about a construction slowdown. Falling home prices, slumping developer sales, and weak government efforts to boost the market all point to lower demand for steel, a key metal in construction. 1Y trend: "Down"



On Friday, stocks closed down even though inflation data hinted at a rate cut, as tech (Amazon -2.3%) fell. Despite the daily drop, June was a strong month with the S&P up ~3% and the Nasdaq up ~4%. In global markets, the Brazilian real weakened due to disagreements between Lula and the country's Central Bank over a 10.5% interest rate. BTC plunged below $61K regardless of the pro-Bitcoin candidate crushing his opponent in the first presidential debate.

Details

• PCE inflation rate dipped to 2.6% in May, matching expectations. This is down slightly from the previous two months and below the long-term average. (BEA)



Crypto

• Bolivia lifted its crypto ban, potentially opening a $10 million monthly market. While exciting, it creates regulatory hurdles for businesses and users. However, this move could spark wider crypto adoption in Latin America, a region seeking financial alternatives due to economic woes. (source)



World Markets

• Germany's unemployment rate hit a 3-year high of 6% in June, exceeding expectations and marking the 18th straight month of joblessness climbing. This rise reflects a sluggish German economy. 1Y trend: "Up" (Gstat)
• Spain's inflation eased slightly to 3.4% in June, below forecasts. This dip is mainly due to falling fuel prices, with some moderation in food price increases. However, recreation costs rose more than last year. Core inflation remained steady at 3%. 1Y trend: "Up" (INE)



Currencies

• Brazil's currency weakened (past 5.56 BRL/USD) due to political tension between President Lula and BCB’s President Campos Neto over a 10.5% interest rate. Despite a strong job market (unemployment at lowest since 2015), concerns about government spending and inflation are hurting the real. 1Y trend: "Up"



On Week 27, key events include jobs data, Fed minutes, and PMI readings globally. European elections in France and the UK will be watched closely. Inflation updates and industrial data from major economies like Germany are also on tap.




SVET Markets Weekly Update (June 17 - 21, 2024)

Week 25 was positive for stocks despite disappointing building permits and a declining Philly Fed index pointed to economic softness, with the Nasdaq and S&P gaining on tech giants. At the same time, we saw significant volatility across global markets, with oil prices surging to a 7-week high due to Middle East tensions, and declining coins with BTC reaching below 64K.

European stocks initially rose but fell amid fears of a far-right victory in the French elections. Meanwhile, Eurozone inflation climbed to 2.6% in May due to rising service costs. The Swiss central bank’s interest rate cut to 1.25% contrasted with the dollar's rise driven by mixed economic data and Fed rate cut expectations.

In China, housing market troubles intensified with the steepest price decline in nearly a decade, undermining government stabilization efforts. The Chinese yuan weakened past 7.28 per dollar, reflecting monetary policy leniency.

On Monday, stock markets climbed, with the S&P and Nasdaq hitting new records. Tech stocks led the gains, while investors awaited economic data and Fed speeches for clues on future interest rates. The NY Empire State Manufacturing Index showed some improvement but still indicated a slight decline in activity. Internationally, EU markets renewed their fall as oil prices hit a monthly high. BTC and ETH are holding their levels at 66K and 3.5K, respectively, after a week's downfall, while most of the crypto market continued to correct, with Solana, Polygon, and Algorand falling by 4% or more.

Details

• The New York manufacturing sector showed signs of improvement in June, with a smaller decline in activity than previous months. While prices and new orders remained mostly flat, there's cautious optimism for the future as business conditions are expected to pick up in the coming months. Despite ongoing job losses, this is the most optimistic outlook in over two years. 1Y trend: "Down" (NYFed)



Crypto

• The TON blockchain's total value locked (TVL) surged to $600 million, a 130% increase in a month. This growth is likely due to rising investor interest and popular mini apps like Notcoin, which has over 35M users. (source)



World Markets

• European stocks erased most early gains. Worries about French elections and a potential far-right win overshadowed initial optimism. The broader European market ended flat, while Adidas shares plunged after bribery allegations emerged. 1Y trend: "Up"
• China's new home prices are falling at the fastest pace in nearly a decade (by 3.9% YoY), despite government efforts. Prices dropped in 68 out of 70 major cities in May, with some cities like Guangzhou experiencing steeper declines than others. This marks the 11th straight month of decline, raising concerns about the effectiveness of China's real estate rescue plan. 1Y trend: "Down"



Currencies

• The British pound is at a one-month low due to upcoming economic data and the Bank of England meeting. The Bank of England might cut interest rates despite inflation meeting their target. This comes amid political uncertainty as Prime Minister Sunak's party struggles in polls before the general election. 1Y trend: "Up"



Commodities

• Gold prices fell to $2,320 per ounce despite a recent gain. This drop is likely due to rising interest rates and investor uncertainty about the Fed's plans. Upcoming economic data will be closely watched for clues about the Fed's next move. Weak demand in key markets like China also contributed to the price decline. 1Y trend: "Up"
• Oil prices hit a six-week high at nearly $80.3 per barrel
, driven by hopes of summer demand despite economic jitters in China. The rise follows OPEC+ production cuts and Saudi Arabia's promise to manage supply. 1Y trend: "Up"
• Aluminum prices fell below $2,500 per tonne in June, a two-month low. This drop mirrors a decline in other base metals due to weak demand and increased supply. Heavy rain in China boosted hydropower, allowing smelters to ramp up production and reach record highs in May. Despite some supply disruptions, overall output rose due to improved conditions in China and weak demand weighed on the market. 1Y trend: "Up"



On Tuesday, the S&P nearly hit a new record high, boosted by Nvidia's surge past Microsoft to become the world's most valuable company. The broader market is mixed, with investors watching economic data and Fed comments for clues about future interest rates. Internationally, EU inflation rose. BTC (65K) and ETH (3.4K) traded lower, with the rest of major coins falling more than 4%.

Details

• Retail sales grew 2.3% in May 2024 compared to last year, but the monthly growth was slow at 0.1%. This comes after a downward revision to April's numbers. Retail sales grew slowly in May (0.1%) after a revised April drop. This missed forecasts and suggests cautious consumers. Sales rose in sporting goods, clothing and some stores, but fell at gas stations, restaurants and furniture stores. Overall growth was weak, even excluding gasoline. 1Y trend: "Side"
• Industrial production surged in May, exceeding expectations by growing 0.9% after flat growth in April. Manufacturing, a major sector, also rose 0.9%. 1Y trend: "Side"



Crypto

• Fewer short-term investors are jumping into crypto (35% of the realized cap, compared to over 70% during previous market peaks), which could slow down the market's growth. An expert points out that short-term ownership of Bitcoin is lower than past highs, suggesting more experienced investors are holding on, which might create a steadier market. (source)



World Markets

• Eurozone inflation rose to 2.6% in May, driven by services costs. Energy prices also rebounded, while food and goods saw slower growth. This aligns with forecasts and prompted the ECB to adjust its inflation expectations upwards for the next three years. 1Y trend: "Down"
• Eurozone economic sentiment reached a 29-month high in June, fueled by optimism about lower inflation and interest rate cuts by the ECB. This positive outlook comes after a slowdown in the European economy during 2022 and 2023. 1Y trend: "Down"



Commodities

• Natural gas prices jumped to 2.9 after a cold streak, driven by an expected heat wave in the Northeast. This surge in demand for cooling could push prices even higher, especially since power plants rely heavily on natural gas. However, some areas in Texas might see temporary relief from a tropical cyclone. 1Y trend: "Side"
• Price of US cotton futures falls below 70 cents a pound for the first time since 2020. Strong dollar, good weather boosting cotton yields, and a global production increase are driving the price down. 1Y trend: "Side"



On Wednesday, cryptocurrencies are on the rise, while the stock market is closed for a holiday. ETH is slightly outperforming BTC with an increase of approximately 2%. The rest of the major coins showed growth of up to 4%. In global markets, oil is rising due to increasing geopolitical tensions.

Details

• Homebuilder sentiment dropped to a 6-month low in June due to high mortgage rates and construction costs. Builders report fewer buyers and lower sales expectations in the coming months. 1Y trend: "Side" (Nahab)



World Markets

• European stocks fell after gains earlier in the week. Investor worries about political instability returned, especially in countries criticized by the EU for high debt. French upcoming elections added to the concern. Chipmakers and healthcare companies were hit the hardest, but gains in British mining stocks limited the overall decline. 1Y trend: "Up"
• South Africa's inflation held steady at 5.2% in May, a four-month low but still above the target rate. While some categories like food saw slower price increases, transport and others rose. Core inflation also remained steady at 4.6%. Overall, price hikes are slowing down slightly. 1Y trend: "Side" (StZa)



Commodities

• Oil prices are near a 7-week high at $85.3 per barrel due to worries about supply disruptions. Drone strikes, potential conflict in the Middle East, and solid demand forecasts are pushing prices up. While US oil stockpiles rose, key producers are sticking to output plans, keeping supply concerns alive. 1Y trend: "Up"



On Thursday, Nasdaq and S&P retreated after reaching record highs. Tech giants like Nvidia are down as investors cashed in. The Dow, less reliant on tech, managed a small gain. Data showed the economy cooling down with building permits dropping, jobless claims rising, and business activity falling. Internationally, the Swiss National Bank cut its rate, indicating a divergence from the Fed's austerity policies, as the Bank of England kept its rate at 5.25% with some members advocating for a decrease. BTC and ETH are holding their levels at 65K and 3.5K, with the rest of major coins climbing a bit, with max gains of ~3%.

Details

• Building permits dropped in May, below expectations. Permits for apartments and single-family homes fell compared to prior months. The decline was widespread except for Midwest and West regions which saw increases. 1Y trend: "Down" (CB)
• Jobless claims in fell slightly but remained high, suggesting a cooling labor market. New claims totaled 238,000, exceeding expectations, and ongoing claims hit a multi-month high. This could push the Federal Reserve to cut interest rates to boost the economy. 1Y trend: "Up" (DOL)
• The Philly Fed manufacturing index dipped in June, signaling a slowdown for the second month in a row. New orders and shipments declined, and employment remained low. Despite this, price pressures persisted, and future growth expectations stayed positive. 1Y trend: "Up" (PhFed)



Crypto

• South Korean crypto trading dropped sharply, falling from $35 billion to $6 billion weekly between Q1 and Q2. This decline is linked to investor risk aversion and US inflation. (source)



World Markets

• The Bank of England held interest rates steady at 5.25% despite falling inflation and some support for a cut. While growth is strong, concerns about future inflation kept policy restrictive. The Bank will watch data closely and adjust rates as needed. 1Y trend: "Up" (BOE)
• The Swiss central bank cut interest rates again by 25 bps to 1.25% in June. This follows similar moves in March. Inflation is expected to stay low, around 1% in coming years. The bank predicts moderate economic growth with some job losses. The franc rose recently due to European instability. 1Y trend: "Up"
• Indonesia's central bank kept interest rates at a record high of 6.25% to tame inflation and support the Rupiah currency. Inflation is within target, but capital outflows due to US policy changes are pressuring the Rupiah. The bank also maintained overnight deposit and lending facility rates. 1Y trend: "Up" (BI)
• Turkey's consumer confidence dropped to a 6-month low in June (78.3). People felt less optimistic about the economy, finances, and spending on big purchases. However, they were slightly less worried about job security, while inflation concerns grew. 1Y trend: "Up" (Tuik)



Currencies

• The dollar is nearing a six-week high as economic data mixed with expectations of future Fed rate cuts. While some indicators were weak, bets on the Fed cutting rates later this year remain high. This, along with central banks in Britain and Switzerland keeping rates steady or cutting them, boosted the dollar. 1Y trend: "Up"
• The Chinese yuan weakened significantly, falling below 7.28 per dollar for the first time in months. This follows the central bank's decision to allow a weaker exchange rate and keep interest rates low, suggesting concerns about China's economic recovery. 1Y trend: "Up"
• South Korean won hit a new low (past 1,385) in June, pressured by a weaker Chinese yuan and global dollar strength. Despite strong exports, the central bank is taking steps to slow the decline using foreign exchange reserves. 1Y trend: "Up"



Commodities

• Silver surged to a two-week high above $30, mirroring gold gains. Weak economic data fueled bets of interest rate cuts by the Fed, joining other central banks easing policy. However, concerns about slowing industrial demand, particularly in China's solar panel industry, limited investor enthusiasm. 1Y trend: "Up"



On Friday, major indexes barely budged, with tech stocks like Nvidia and Apple dipping, but consumer staples like Amazon rising. Data showed improving business conditions, which confused investors who had seen a weak economy earlier in the week. In global markets, the dollar surged as business growth in the Eurozone slowed down. BTC continued its drop, hitting 63.5K, with ETH settling at 3.5K. Consequently, the crypto market was in the red, with the largest market cap coins sliding by about 2%.

Details

• Business activity hit a 16-month high in June, driven by a surge in services. Manufacturing grew too, but at a slower pace. Companies are hiring again due to rising demand and optimism, and inflation pressures seem to be easing. 1Y trend: "Up" (PMI)
• Home sales dipped slightly in May, hitting a 4-month low. This comes despite record high home prices. Rising inventory suggests a shift in the market, with experts expecting more sales and potentially slower price growth soon. (NAR)



Crypto

• ChatGPT-4 predicts ETH's price could hit $9K by mid-2025, depending on factors like new regulations and institutional investment. A more likely range is $4.5K to $6K, with a chance of staying around $3K. (source)



World Markets

• Business growth in the Eurozone slowed down in June, but remained positive for the fourth month. Services held steady while manufacturing dipped. New orders fell, and hiring slowed. Inflation for materials used in production eased, allowing companies to raise prices at a slower pace. 1Y trend: "Down" (PMI)



Currencies

• The dollar hit a seven-week high as business activity increased. This could delay the Fed's rate cuts compared to other central banks that are already easing. 1Y trend: "Up"



Commodities

• Oil prices dipped slightly to $80.73 per barrel due to a strong dollar, despite positive signs like rising demand and lower stockpiles. 1Y trend: "Up"



On Week 26, investors will focus on prices, spending and housing data, with Fed speakers eyed. Globally, interest rates and inflation are key, along with consumer confidence in major economies.




Comment: Recommendations

Long-term

Theses: Geopolitical tensions rising which increases a rift between Global North and Global South. It will lead to a rising number of kinetic conflicts including using tactical nuclear weapons.

Conventionalities:

1. Massive inflow of capital and intellectual resources to a country;
2. Interruption of the energy (fuel, electricity) supplies;
3. Interruption in food and products supply chains;
4. Interruption of international air and maritime passenger traffic;
5. Increasing difficulties of monetary transactions and interruptions of world-wide financial network, a fragmentation world's financial system;
6. Increasing difficulties accessing international touristic landmarks and sites;
7. Drone attacks on the civilian targets on the territories of rivaling countries with a loads up to 2-3 kilogmas of explosives.
8. Re-renewal of air, sea and ground thermonuclear weapons tests.
9. Attack on crucial international commerce, trade and communication infrastructure such as oil and gas fields as well as transportation (tankers, gas delivery system), submarine cables, communication satellites and marine trade routs (including ports and re-fueling infrastructure)
10. Increasing presence of government in the economy, augmented tax burden.

Allocation Principles

1. Designate up to 20% of all allocations to assets, which are likely to rise in price or to hold their value in the case of a nuclear weapon deployment.
2. Retain from allocating to foreign countries, specially from the opposite camp (except, in highly liquid assets such as cryptocurrencies).
3. De-invest from assets / companies which profits are heavily relying on foreign markets;
4. De-invest from assets / technologies which scaling depends on national government policies, such as Education (specially, politics, legal, art and other humanitarian disciplines), Movies, Theater, International Tourism, Cruises, Travel;
5. De-invest from assets / companies heavily relying on day-per-day human traffic such as big store chains, restaurants and movie-theaters as well as air and sea passenger transportation companies;

De-Invest

Stocks Allocations

1. Local energy producers and utilities companies;
1. Energy Sector: ExxonMobil (XOM); Chevron (CVX); Schlumberger (SLB);
2. Utilities Sector: NextEra Energy (NEE); Duke Energy (DUK); The Southern Company (SO).
2. Defensive technologies: bio-defense equipment producers, nuclear weapons shelter builders, portable energy producing devices, protective armor; fire-fighting equipment producers; temporary houses (including tents and shelters) producers; medical field equipment producers; cyber-attacks prevention and defense technologies and equipment;
1. Healthcare Sector: Pfizer (PFE); Johnson & Johnson (JNJ); UnitedHealth Group (UNH).
3. Offensive technologies: small arms producers; artillery and artillery shells producers;
1. Defense and Aerospace Sector: Lockheed Martin (LMT); Northrop Grumman (NOC); Raytheon Technologies (RTX).
4. Service and specialized equipment producing companies: equipment repair, land and seas areas cleaning and deactivation, special protective equipment and protective suits for civilians; detective equipment (scopes)
5. Local producers of major consumers products and services: local producers of mostly imported foods and consumer products, local hotels situated in a highly attractive touristic areas, producers of canned and other long-term holding foods;
6. Remote access technologies: remote working, Metaverse;
7. Financial technologies: decentralized financial networks (including crypto-currencies) and their infrastructure (such as satellites based networks)
8. New and replacement materials producers:
1. Materials Sector: Rio Tinto Group (RIO); Vale SA (VALE); Ecolab Inc. (ECL)
2. Industrial Sector: Boeing (BA); General Electric (GE); Caterpillar Inc. (CAT);

Commodities Allocations

1. A nuclear materials: Uranium (specially, after correction to 50);
2. Precious metals: gold, silver;
3. Rare metals: specially those which production is concentrated on the territory of rivaling countries (specially, China, Russia, Iran, Central and Sub-Sahara Africa);

VC Allocations:

1. Dual-use technologies: cosmos, drones;
2. Food technologies: hydroponics
3. Home Games Entertainments:

Real Estate

1. Non-commercial real-estate (specially, private home builders) in the heavily populated areas potentially predominantly affected by an incoming peoples traffic;
2. Home materials producers, mobile homes and fast-build homes producers;



SVET Markets Weekly Update (June 10 - 14, 2024)

On Week 24, stocks reached ATHs as the Fed held the interest rate steady at 5.25% and hinted at future cuts. On global markets, the EU stock market declined, impacted by far-right gains in elections, prompting President Macron to call for a snap legislative vote. Most sectors saw declines, with construction being the hardest hit. In the crypto market, BTC and ETH corrected sharply, with the rest of the crypto market following suit.

On Monday, stocks rose, with the S&P and Nasdaq hitting new record highs despite investors awaiting the Fed's rate decision later this week. Energy and utility stocks led the gains, while financials and consumer staples fell. Internationally, EU stocks plunged after far-right parties won the EU Parliament elections. BTC and ETH dipped more than 2%, signifying a correction prior to the Fed meeting, with the rest of the crypto market following.

Details

• Consumer inflation expectations dipped to 3.2% in May. Some sectors like medical care saw price increase expectations rise, while others like education saw them decline. Unemployment expectations also rose to 38.6%. 1Y trend: "Down" (NYFed)



Crypto

• South Korea's Financial Services Commission (FSC) has issued guidelines to regulate NFTs as virtual assets. Mass-produced, divisible, and payment-focused NFTs will be treated similarly to cryptocurrencies. The FSC will review each NFT collection on a case-by-case basis to determine if it can be used as payment. NFTs with little value, such as those used in ticketing or digital certificates, will be treated differently. (source)



World Markets

• The European stock market declined. The elections showed gains for the far-right, prompting President Macron to call a snap legislative vote. Most sectors were down, with construction being the hardest hit, and French companies such as Societe Generale and BNP Paribas leading the drop. 1Y trend: "Up"
• Turkey's industrial production dipped 0.7% in April 2024, reversing gains from the previous month. This is the first decline since April 2023, with manufacturing and utilities experiencing slowdowns. 1Y trend: "Side" (Tuik)



Commodities

• Gold prices stabilized on 2305 after its largest plunge since November 2020 on a strong jobs report which lowered expectations of a Fed rate cut this year. Investors are hesitant as China stopped buying gold, and European political uncertainty is rising after the far-right gained the EU Parliament and Macron called for a snap election. 1Y trend: "Up"
• Oil prices rose over to 76.5 due to hopes for summer fuel demand and upcoming economic data. This follows a week of decline due to worries about slowing growth and OPEC+ raising production. 1Y trend: "Side"



On Tuesday, the stock market fluctuated, with the S&P up, the Dow down, and the Nasdaq hitting a new ATH. Technology stocks led the gains, headed by Apple, which rose 6%. On global markets, European stocks declined for the third day due to political concerns. BTC and ETH continued to move south, dragging the rest of the crypto market with them.

Details

• Small business confidence ticked up slightly in May, but remained below average. Inflation is still the top concern, though hiring plans are the highest this year. Supply chains seem to be improving, but financing challenges are on the rise. 1Y trend: "Down" (Nfib)



Crypto

• The EU's 185 million citizens voted for a new Parliament. The Christian Democrats and Social Democrats fared relatively well, while the pro-business Renew Europe Group, which supports crypto, lost 23 seats. The Greens also suffered losses, while far-right parties made significant gains. (source)



World Markets

• European stocks are down for the third day in a row, with the Stoxx 50 and Stoxx 600 declining by 1% due to concerns about political turmoil in France. French President Macron called for a snap election after the far-right's success in the EU election, which could impact his ability to pass legislation. The uncertainty has raised fears about France's fiscal situation, with concerns Macron may resign if his party performs poorly in the election.< 1Y trend: "Up" /li>
• Brazil's inflation rose to 3.93% in May, exceeding expectations and reversing a months-long decline. This uptick, driven by food, transportation, and healthcare costs, worries policymakers concerned about rising spending and its impact on prices. 1Y trend: "Side" (source)
• Mexico's industrial activity grew 5.1% in April, exceeding expectations after a previous decline. Construction and utilities led the surge, while manufacturing recovered. This increase was on a yearly basis, however monthly data showed a slight decrease. 1Y trend: "Side" (source)



Currencies

• The dollar index rose to 105.3, its highest level in a month, as traders reduced expectations for a Fed rate cut. Following a strong jobs report, the chances of a rate cut in September fell to 52.6% from 66.9% the previous week. 1Y trend: "Up"



Commodities

• Copper prices fell below $4.45 per pound in June, erasing May's record high of $5.20. Demand is weak, with Chinese imports of copper ore declining 7.1% year-on-year and inventories reaching their highest level since 2020. Despite this, prices are still 13% higher year-to-date due to speculation about looming shortages in the electrification industry. 1Y trend: "Up"



On Wednesday, stocks hit new ATHs as inflation eased and the Fed held the rate at 5.25%, hinting at future cuts. Apple and Tesla led the gains. On global markets, EU stocks rebounded on the Fed's decision and easing concerns about political instability in France. BTC and ETH, after a 3-day plunge, attempted to recover on an unexpected inflation dip.

Details

• The Fed held interest rates steady at a high level (5.25%-5.50%) in June, waiting for inflation to slow down more. They now expect just one rate cut this year, with inflation forecasts slightly higher than before. The economy is still projected to grow steadily, but unemployment is expected to tick up a bit. 1Y trend: "Up" (Fed)
• Annual inflation unexpectedly dipped to a 3-month low of 3.3% in May, driven by easing prices for most goods. Compared to April, overall inflation remained flat due to lower gasoline prices countered by rising housing costs. Core inflation slowed to a three-year low of 3.4% in May, easing from the prior month and below expectations. Shelter costs, a major driver of inflation, also moderated slightly. 1Y trend: "Down" (BLS)



World Markets

• European stocks surged on hopes of a Fed rate cut. French political stability also eased concerns. Tech and industrial sectors led the rally, while automakers lagged due to emission lawsuits. SAP and Schneider Electric - up, but Mercedes and BMW - down. 1Y trend: "Up"
• China's inflation remained low at 0.3% in May, below expectations. This is the fourth month of rising prices, suggesting a pick-up in domestic demand. While non-food items edged up slightly, food prices continued to fall, although at a slower pace. Overall inflation is still muted, even with some price fluctuations in specific categories. 1Y trend: "Side" (CnStat)



Currencies

• The Brazilian real fell to a new low in June due to worries about government spending and rising inflation. President Lula's plans to increase spending cast doubt on the country's ability to control its deficit. This comes as inflation rose above expectations in May. 1Y trend: "Up"
• The Mexican peso is at a 15-month low (18.79) due to political uncertainty. Investors are worried about proposed reforms by the incoming president, fearing they could hurt the economy or violate trade deals. This follows concerns about similar reforms from the current president before he leaves office. 1Y trend: "Down"



Commodities

• Lithium carbonate remains near multi-year low of CNY 100K per tonne in June due to a global electric vehicle battery raw material surplus. Producer expansion and government subsidies are fueling oversupply fears, while trade tensions add pressure with tariffs on Chinese EVs. 1Y trend: "Down"



On Thursday, the stock market rose slightly on a drop in CPI and a surge in jobless claims. Tesla gained after shareholder approval of Musk's pay package. Internationally, EU markets continued to drop as manufacturing activity slowed. Both BTC and ETH are down after an attempted bounce on easing inflation data. The majority of coins and tokens followed, with Polygon, Algorand, and Avalanche decreased more than 4%.

Details

• Core producer prices dipped to 2.3% YoY in May, down from 2.4% in April. This is still above the historical average of 2.57%, though well below the record high of 9.7% set in March 2022. 1Y trend: "Side" (DOL)
• Jobless claims surged to 242K, the highest since August 2023, indicating a weakening job market. This could lead the Federal Reserve to cut interest rates to boost the economy. 1Y trend: "Up" (DOL)



Crypto

• Representative Thomas Massie introduced a bill to abolish the Fed. The bill was inspired by a book about Bitcoin. (source)



World Markets

• European stocks fell sharply after inflation data boosted bonds. The gap between French and German bond yields widened the most in years on political worries.
• Eurozone factories saw a steeper decline than expected in April. Industrial output shrank 3% compared to the same month last year, following a revised 1.2% drop in March. 1Y trend: "Down" (Estat)
• Brazil’s retail sales in April grew 2.2% compared to the same month last year. This is slightly lower than the average annual growth of 3.23% seen between 2001 and 2024. 1Y trend: "Up" (Ibge)
• India's manufacturing output grew 3.9% in April compared to the same month last year. This is lower than the long-term average of 5.81% (2006-2024). Manufacturing has fluctuated significantly, reaching a record high of 196.0% in April 2021 and a record low of -66.6% in April 2020. 1Y trend: "Side" (MOSPI)



On Friday, the stock market was mixed. Consumer confidence dipped and inflation worries rose, pulling down most sectors while tech stocks continued to shine. On global markets, EU stocks are down, again, while the dollar and gold are up. BTC and ETH keep falling, reaching 65K and 3.3K respectively, with ETH declining faster. Cosmos, Algorand, Polygon, and Avalanche declined by 4% and more.

Details

• Consumer confidence dropped to a 7-month low in June (65.6), hurt by inflation fears and shaky income. The University of Michigan survey shows consumers are cautious about the future but see little change in current conditions. 1Y trend: "Up" (SCA)



World Markets

• European markets plunged after a week of downfall. Political turmoil following the EU elections, particularly upcoming French elections, spooked investors. Fears of uncontrolled spending by a potentially stronger National Rally hurt stocks, especially financial and luxury brands. 1Y trend: "Up"
• India's wholesale inflation jumped to 2.61% in May, exceeding expectations and marking the highest rate in 15 months. This rise was driven by a surge in food prices, particularly vegetables, and a rebound in manufacturing after a long period of decline. Fuel price increases were modest. 1Y trend: "Up" (Nic)
• After raising rates in March, the Bank of Japan kept them steady at around 0% to 0.1% in June but hinted at reducing future bond purchases. While the economy shows moderate recovery, some areas remain fragile. Inflation is around the target but driven by external factors. The Bank aims to allow for more flexibility in long-term interest rates. 1Y trend: "Up" (BOJ)
• France's inflation rose slightly to 2.3% in May, exceeding forecasts. Food and energy prices climbed, while services and manufactured goods remained mostly steady. Monthly inflation was flat, with rising food costs countered by falling energy prices. EU-harmonized figures showed a similar trend, with a slightly lower annual rate than initial estimates. 1Y trend: "Down" (Insee)



Currencies

• The dollar is rising for a second week in a row as investors fear the Fed will maintain high interest rates. This comes despite recent signs of cooling inflation and increased unemployment claims. 1Y trend: "Up"
• Brazil's currency weakened to 5.38 due to government plans to increase spending. This follows a recent slump and worries about inflation. The president's decision to prioritize spending over deficit reduction is causing skepticism in the market. 1Y trend: "Up"
• The Japanese yen fell to near a 34-year low, again, after the Bank of Japan surprised markets by keeping interest rates steady. 1Y trend: "Up"



Commodities

• Gold prices rebounded above $2,310, reversing an earlier dip. This was fueled by lower-than-expected US inflation data, suggesting the Federal Reserve might hold off on raising interest rates. While some Fed officials predict a rate cut, others foresee none this year. 1Y trend: "Up"



On Week 25, data on spending, housing, and manufacturing is key. Central bank decisions around the world are in focus, especially in China where a flood of economic data is expected. Inflation and consumer confidence are also important, particularly in the UK.




SVET Markets Weekly Update (June 3 - 7, 2024)

On Week 16, markets were mixed as investors grappled with conflicting economic data, political events, and concerns about potential interest rate changes and economic slowdown.

The week began with stocks declining marginally as lower-than-expected PMI data pointed to a manufacturing slowdown, raising fears of a weakening economy. However, positive economic data and a tech rally on Wednesday propelled the S&P and Nasdaq to new all-time highs. Thursday saw a pause in stock gains as investors awaited interest rate clues, while Friday brought mixed results as higher unemployment numbers renewed slowdown concerns.

Global Markets React to Political Events: Indian bonds fell and the rupee weakened as Modi's party didn't secure a dominant parliamentary majority. The Mexican peso also weakened after the pro-government party won. South African stocks rose on the lessened possibility of a pro-Marxist party taking control. The ECB cut rates to 4% but raised inflation forecasts, while Eurozone GDP growth continued to slow.

Commodities and Energy: WTI oil prices fell after OPEC+ decided to increase production, while natural gas prices rose due to the hot summer.

Crypto Markets Remained Stable Until Friday: BTC and ETH remained steady around $70K and $3.7K for most of the week, with the broader crypto market fluctuating within narrow ranges. On Friday, BTC and ETH dropped by around 3-4% due to technical sales, while altcoins like Polygon, Uniswap, Polkadot, Algorand, and Cosmos fell by 7% or more.

On Monday, stocks declined marginally after a lower-than-expected PMI indicated a manufacturing slowdown. Investors shifted their focus from expecting interest rate cuts to fearing a weakening economy, with banks and industrial stocks leading the decline. The tech sector was mixed, with Nvidia gaining and Microsoft and Alphabet falling. Internationally, Indian bonds fell as Modi's party was expected to win a large parliamentary majority, the Mexican peso weakened sharply after the pro-government party won, and South Africa's stocks rose as investors reacted to the possibility of a pro-Marxist party taking control being lessened. WTI oil fell after OPEC+ decided to increase production. Meanwhile, BTC and ETH remained steady at their two-week levels (~70K and ~3.7K) as the majority of the crypto market fluctuated within relatively narrow ranges.

Details

• The manufacturing sector showed continued improvement in May, with a PMI rising to 51.3. New orders grew, boosting production, though domestic demand lagged exports. Businesses grew more optimistic, hiring more staff and building inventories. Input costs rose at the fastest pace in a year, leading to higher prices. 1Y trend: "Up" (SP)



Crypto

• Mexico's new president, Claudia Sheinbaum is from the same party as outgoing President Andres Manuel Lopez Obrador, who is not eligible for re-election. As a result, Mexico's crypto policy is likely to remain unchanged (basically, no policy), as Sheinbaum has aligned herself with Obrador's policies. (source)



World Markets

• Eurozone manufacturing decline slowed in May. The PMI reached its highest level in over a year, indicating a slower decline in production. New orders, exports and purchasing activity also showed improvement. Business sentiment is at its highest level since early 2022. 1Y trend: "Up" (PMI)
• Indian government bond yields hit a one-year low below 7% in June. Investors are optimistic about India's strong economy and stable government after exit polls predicted a win for the incumbent party. This stability is expected to continue economic reforms and attract foreign investment. 1Y trend: "Down"
• Brazil's manufacturing growth slowed in May (PMI 52.1) due to floods. Though new orders rose and hiring remained strong, production stalled and business confidence dipped. Despite flood challenges, expectations of future recovery kept the outlook positive. 1Y trend: "Up" (PMI)
• South Africa's stock market rebounded 1.4% after four days of decline. Investors reacted to local election results and global economic worries. The leading party (ANC) may form a coalition with a business-friendly party (DA), while talks with a more radical option (MK) seem unlikely. 1Y trend: "Up"
• Turkey's inflation hit a new 18-month high in May at 75.45%, exceeding expectations. Housing costs skyrocketed, driving the surge. While food and most goods remained very expensive, some sectors like transportation saw a slight price slowdown. The core inflation rate also dipped slightly. Monthly price increases held steady. 1Y trend: "Up" (Tuik)



Currencies

• The Euro is down as investors expect the ECB to cut interest rates by 0.25% this week, for the first time in years (since 2016). This would widen the gap between European and US rates. The ECB will reveal its plans on Thursday, with markets still anticipating two rate cuts in 2024 despite recent inflation concerns. 1Y trend: "Side"
• Mexico's peso weakened to a near 7-month low after the Moderna party's big win in congressional elections. Investors worry the party's control could lead to more government control of the economy and hinder reforms. This follows concerns over President-elect Sheinbaum's plans to continue some of her predecessor's policies. 1Y trend: "Side"



Commodities

• WTI crude oil prices fell sharply to 74.5 after OPEC+ announced a plan to slowly increase production by over 1.8 million barrels per day over the next year. This comes amid concerns about slowing economic growth and high interest rates, which could dampen demand for oil. 1Y trend: "Side"



On Tuesday, stock indexes were uncertain after mixed economic data. Job openings fell sharply, but factory orders rose. Real estate and consumer staples led the gains, while energy stocks fell due to lower oil prices. On global markets, the Indian rupee weakened after initial election results suggested a tighter win for Modi's party. BTC and ETH pushed up slightly, while some of the major coins such as Uniswap (+22%) outperformed.

Details

• Job openings in the dropped to an 18-month low in April, falling below expectations. The decline was widespread across most regions and industries, except for the South and private education. 1Y Trend: "Down" (BLS)
• Economic optimism dropped to a 6-month low in June (40.5). This index has been negative for over 2 years. Consumers feel worse about their finances (47.9) and government economic policies (36.7). However, there's a slight improvement in the perceived short-term outlook (36.8). Investors are slightly more optimistic than non-investors. 1Y Trend: "Down" (Techno)



Crypto

• Thailand approved its first Bitcoin ETF, allowing wealthy investors to invest locally. This follows a recent rule change permitting investment in foreign Bitcoin ETFs through private funds. The new ETF, launched by One Asset Management, is set to begin trading soon. (Source)



World Markets

• Germany's unemployment stayed at a high 5.9% in May, the sixth month in a row. This is worse than expected, with the number of unemployed rising by 25,000 to 2.76 million. This continued increase points to a struggling German economy. 1Y Trend: "Down" (Stat)
• India's stock market experienced a dramatic drop, reversing Monday's gains, as early election results cast doubt on a strong win for Prime Minister Modi's party. The key market index plunged nearly 6%, its worst one-day performance in years. This uncertainty about future policies could impact India's recent economic boom. 1Y Trend: "Up"
• South Africa's economy grew at a slower pace than expected in Q1 2024, expanding by 0.5% compared to a year ago. This follows a previously reported higher growth rate of 1.4% in the last quarter. 1Y Trend: "Down" (Stat)
• Brazil's GDP grew at an average annual rate of 2.45% over the past three decades. This year's Q1 growth was 2.5%, but it fluctuated significantly, reaching a high of 12.4% in 2021 and a low of -10.1% in 2020. 1Y Trend: "Side" (Ibge)



Currencies

• Indian currency weakened after initial election results suggested a tighter win for Prime Minister Modi's party. Investors worry a weaker majority could stall economic reforms and raise spending, jeopardizing India's strong fiscal position. Despite the currency dip, India's GDP growth for the latest quarter exceeded expectations. 1Y Trend: "Up"
• Brazil's currency weakened due to worries about government spending. Despite economic growth, high spending on social programs raised concerns about inflation. This, along with a trade deficit, caused the Brazilian real to fall to its lowest point in almost a year. 1Y Trend: "Up"



On Wednesday, stocks surged, with the SP and Nasdaq hitting new ATHs, fueled by positive economic data and a tech rally. On world markets, natural gas prices are rising due to the hot summer. BTC and ETH continue to edge up slowly, with the rest of the crypto market keeping pace.

Details

• Business activity jumped in May to a 14-month high, driven by a surge in new orders and growth in both manufacturing and services. Employment stayed flat, and inflation continued to rise. 1Y Trend: "Side" (PMI)
• Mortgage applications dropped significantly in May, down 5.2% from the prior week. This extends a downward trend, due to rising interest rates that have been above 7% for two months. Refinancing applications, highly affected by rate changes, saw a steeper decline of 7%. Home purchase applications also dipped by 4%. 1Y Trend: "Down"
• Private sector hiring slowed in May, adding only 152K jobs, below expectations. Service industries led growth, while information and business services saw job losses. Manufacturing and mining also declined. Wage growth remained steady, but job-changers saw smaller pay increases. An economist noted a slowdown but said the labor market is still strong. 1Y Trend: "Down" (ADP)
• Car sales edged up to 15.91M in May from 15.78M in April. This is still far below the peak of 21.71M sales in October 2001, but above the record low of 8.48M reached in April 2020. 1Y Trend: "Up"



Crypto

• Turkey won't tax stock or crypto profits, but is considering a small tax on buying and selling them. This aims to broaden their tax reach, after previously reducing stock market tax to 0%. (source)



World Markets

• Eurozone producer prices continued to fall in April, marking the 12th month of decline. The drop of 5.7% was bigger than expected, with energy prices leading the decrease at 14.7%. 1Y Trend: "Up" (EC)
• Eurozone economic activity accelerated in May to a 1-year high of 52.2, driven by stronger demand and business optimism. This increase is near the long-term average since 1998. While inflation eased, it remained above pre-pandemic levels. 1Y Trend: "Down" (PMI)
• Brazil's business activity grew in May but at a slightly slower pace than April. This is still a strong performance, with the service sector leading the way. Despite some regional weakness and rising costs, sales increased at a near two-year high. 1Y Trend: "Up" (PMI)
• Russia's monthly GDP growth compared to previous year rose to 4.40% in April from 4.20% in March. Historically, it averaged 1.74%, with a high of 11.60% in May 2021 and a low of -11.80% in May 2009.



Commodities

• Natural gas prices are rising due to hot summer weather expected across the country, especially in Texas and the East Coast. This is pushing prices closer to a 6-month high. Production is high and stockpiles are full, but rising demand and LNG exports are keeping prices up for now. 1Y Trend: "Up"



On Thursday, stocks paused after recent gains, with investors waiting for clues on interest rates. Internationally, the ECB cut its rate to the expected 4% but raised its inflation forecast. BTC and ETH hold their levels.

Details

• Jobless claims rose above expectations to a 2-month high, reaching 229K. This suggests a cooling labor market, potentially leading to Fed rate cuts. The overall trend remains slightly positive with the 4-week average down. (DOL)
• Employers announced fewer job cuts in May than in April or the prior year. However, hiring also dropped to its lowest level in a decade, suggesting less movement in the job market. This comes despite overall job cuts being lower year-over-year. 1Y trend: "Up" (CH)



World Markets

• The European Central Bank cut interest rates by 25 basis points to 4% for the first time in nine months as inflation eased but remained above target. They lowered rates to fight inflation while keeping an eye on future economic data. Inflation forecasts were actually revised upwards, with growth expected to pick up slowly in the coming years. 1Y trend: "Up" (ECB)
• Euro area retail sales did not grow in April compared to the same month last year, despite a small increase in March. This was lower than expected forecasts. 1Y trend: "Side" (EC)
• Russian car sales jumped 150% in May, likely due to a low sales base in 2022 following sanctions. 1Y trend: "Up" (Aeb)



Commodities

• Oil prices rose over 2% for a second day, reaching $75.6 per barrel. This increase follows the European Central Bank's interest rate cut and speculation of a similar move by the Federal Reserve in September. The Fed rate cut is seen as likely to boost economic activity and oil demand.



On Friday, stocks are mixed as higher unemployment surprised markets renewed fears of a slowdown. Internationally, Eurozone's GDP growth continued to slow, showing a marginal increase of 0.4%. Both BTC and ETH dropped by approximately 3% and 4% respectively due to technical sales. The rest of the crypto market tumbled, with Polygon, Uniswap, Polkadot, Algorand, and Cosmos down 7% and more.

Details

• The unemployment rate unexpectedly rose to 4% in May, the highest since January 2022. This is a sign of a weakening labor market as both employment levels and labor force participation declined. 1Y trend: "Up" (BLS)



Crypto

• DeFi's total value locked jumped 17% in May to $192B, the highest since February 2022, due to rising crypto prices and trading activity. However, despite this growth, fewer users participated, with the number of active wallets dropping 21%. (source)



World Markets

• Eurozone's GDP grew modestly at 0.4% compared to previous year, picking up pace after a sluggish period. 1Y trend: "Down" (EC)
• Brazil's car production dropped sharply in May, down 24.9% from April and 26.8% from a year ago. This is the second lowest production month this year. (rezko - means "sharply" in Russian, which best captures the significant drop). 1Y trend: "Side" (AN)
• Mexico's inflation rose to 4.69% in May, the highest in four months. Food and transportation prices increased the most. However, core inflation, which excludes volatile items, continued to decline to a 16-month low of 4.21%. 1Y trend: "Up" (Inegi)



On Week 12, the Fed rate decision and inflation numbers are key, while Europe and Asia report on growth, industrial output, and trade. China, India, Brazil, and Russia also reveal inflation data. Watch for business confidence in Australia and a rate call from Japan's central bank.




SVET Markets Weekly Update (May 27 - 31, 2024)

On Week 22, stock markets ended slightly in the red as economic uncertainty and political developments dominated investor sentiment. The GDP growth was revised sharply down to 1.3%. Inflation remains above the Fed's targets.

Eurozone inflation unexpectedly accelerated, with major economies in the region continuing to decelerate. This combination of rising inflation and slowing growth hints at the onset of stagflation in Europe.

Economic signals from China were mixed. The IMF raised its growth estimates, but other data showed slowing business activity.

Commodities continued their upward trend, with aluminum hitting a two-year high.

The crypto market paused amidst mixed news. BTC and ETH remained within narrow trading ranges, close to their ATHs. Market sentiment appears to be cautious as investors await clearer signals.

On Monday, stock markets closed for Memorial Day holiday, and the dollar is on hold while BTC and ETH took a pause after revisiting 70K and 3.9K, respectively. The rest of the crypto market continued to grow with Chainlink adding 10%, while Polygon, Solana, Avalanche, and Algorand grew by 4% or more.